For release 10:00 am (EST) Thursday, February 25, 2010 USDL-10-0232

Technical information: (202) 691-5606 • dprweb@bls.gov • www.bls.gov/mfp

Media contact: (202) 691-5902 • PressOffice@bls.gov

MULTIFACTOR PRODUCTIVITY TRENDS IN MANUFACTURING — 2007

Manufacturing sector multifactor productivity increased at a 4.7 percent annual rate in 2007, the U.S. Bureau 

of Labor Statistics reported today (chart 1). This was the largest gain in multifactor productivity in the series 

which began in 1987 (table 1). Multifactor productivity measures the change in output per unit of combined 

inputs. Multifactor productivity is designed to measure the joint influences on economic growth of technological 

change, efficiency improvements, returns to scale, reallocation of resources, and other factors, allowing for the 

effects of capital, labor and, in the case of the manufacturing sector, intermediate inputs (energy, materials, 

purchased business services). Multifactor productivity, therefore, differs from labor productivity (output per hour 

worked) measures that are published quarterly by BLS since it includes information on capital services and other 

data that are not available on a quarterly basis.

Durable goods manufacturing sector multifactor productivity grew 6.0 percent in 2007, accelerating from its 

4.2 percent growth rate in 2006. Nondurable goods manufacturing sector multifactor productivity grew 3.0

percent in 2007, after a 0.6 percent increase in 2006. 

Chart 1. Multifactor productivity for total, durable, and nondurable manufacturing, 2000-2007

 Percent change

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

2000 2001 2002 2003 2004 2005 2006 2007

Total manufacturing Durable manufacturing Nondurable manufacturing
- 2 - 

Historical trends in manufacturing

Multifactor productivity in manufacturing grew 1.6 percent annually between 1987 (the starting point of the 

series) and 2007 (table A). Sectoral output increased at a 2.4 percent annual rate over the period and combined 

inputs rose an average of 0.8 percent per year. Output per hour (labor productivity) grew 3.6 percent. For the 

2000-2007 period, multifactor productivity in manufacturing rose more rapidly than in previous periods, 

averaging 2.1 percent per year, slightly outpacing the 2.0 percent growth rate in the 1995-2000 period. 

Historical trends in growth in output per hour can be attributed to multifactor productivity growth and the 

contributions of the intensities of capital and of intermediate inputs. The relationship between labor productivity 

growth and its components can be seen in table B and chart 2. Chart 2 shows how, relative to output per hour,

contributions of multifactor productivity, capital intensity, and intermediate input intensity shifted upward in the 

latter half of the 1990’s. These contributions have slowed somewhat during the 2000-2007 period.

Of the 3.6 percent growth rate in labor productivity in the 1987-2007 period, 1.6 percent can be attributed to 

increases in multifactor productivity, 0.5 percent to the contribution of capital intensity, 0.7 percent to changes in 

materials intensity, and 0.7 percent to changes in business services intensity (table B). 

Chart 2. Percentage point contributions to growth in output per hour in the manufacturing sector, 1987-2007

 Percent change

The contribution of intermediate inputs includes energy, materials, and purchased business services. Multifactor 

productivity, the contribution of intermediate inputs, and the contribution of capital intensity may not sum to 

output per hour due to independent rounding (chart 2). 

Revised Measures

Previous and revised productivity and related data for 2005 and 2006 for the manufacturing, durable goods 

manufacturing, and nondurable goods manufacturing sectors are displayed in Table C. In 2006, productivity 

growth was revised upwards to 2.5 percent from 1.6 percent in the manufacturing sector, to 4.2 percent from 3.2 

percent in the durable manufacturing sector, and to 0.6 percent from -0.2 percent in the nondurable manufacturing 

sector. Productivity growth was also revised downward for all three major sectors in 2005. The revisions in both 

years were due to large revisions in source data for energy, materials, and purchased services.

1.6

0.2

1.2

2.0 2.1

1.4

1.3

1.7

1.9

1.0

0.5

0.3

0.4

0.7

0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

1987-2007 1987-1990 1990-1995 1995-2000 2000-2007

Contribution of capital intensity Contribution of intermediate inputs Multifactor productivity
- 3 - 

Table A. Compound average annual growth rates for productivity, sectoral output, and inputs in the 

manufacturing sector for selected periods, 1987 to 2007 

1987- 

2007

1987- 

1990

1990- 

1995

1995- 

2000

2000- 

2007

2006- 

2007

Productivity

 Multifactor productivity1 1.6 0.2 1.2 2.0 2.1 4.7

 Output per hour of all persons 3.6 1.8 3.4 4.6 3.7 3.4

 Output per unit of capital services 0.3 -0.1 0.6 0.3 0.2 1.1

 

Sectoral Output 2.4 2.2 3.3 4.5 0.5 1.6

Inputs

 Combined inputs2 0.8 2.0 2.0 2.5 -1.6 -3.0

 Hours3 -1.1 0.4 -0.1 -0.1 -3.1 -1.7

 Capital services 2.2 2.3 2.7 4.2 0.4 0.5

 Energy -0.8 2.0 1.6 -2.5 -2.5 -2.7

 Non-energy materials 1.4 1.6 3.6 4.9 -2.6 -8.1

 Purchased business services 2.3 5.5 3.0 2.4 0.5 -0.3

1

Output per unit of combined labor hours, capital, energy, materials, and business services inputs.

2

The growth rate of each input is weighted by its share of nominal costs.

3

Hours at work of all persons. 
- 4 - 

 1Growth rate in capital services per hour multiplied by capital's share of current dollar costs.

2

Growth rate of information processing equipment and software per hour multiplied by its share of total current dollar 

 costs.

3

Growth rate in intermediate inputs per hour multiplied by intermediate inputs share of current dollar costs.

4

Growth rate in energy services per hour multiplied by energy’s share of current dollar costs.

5

Growth rate in materials services per hour multiplied by materials’ share of current dollar costs.

6

Growth rate in business services per hour multiplied by business services’ share of current dollar costs.

7 Output per unit of combined labor hours, capital, energy, materials, and business services inputs. 

Table B. Compound average annual growth rates in output per hour of all persons and contributions of 

capital intensity, intermediate inputs intensity, and multifactor productivity in the manufacturing sector

for selected periods, 1987-2007

1987-

2007

1987-

1990

1990-

1995

1995-

2000

2000-

2007

2006-

2007

Manufacturing

Output per hour of all persons 3.6 1.8 3.4 4.6 3.7 3.4

Contribution of capital intensity1 0.5 0.3 0.4 0.7 0.5 0.4

Contribution of information 

processing equipment and 

software2 

0.2 0.2 0.2 0.4 0.2 0.1

Contribution of all other 

capital services

0.3 0.1 0.2 0.3 0.4 0.2 

Contribution of intermediate inputs3 1.4 1.3 1.7 1.9 1.0 -1.6

 Contribution of energy 

 intensity4 0.0 0.0 0.0 -0.1 0.0 0.0

 Contribution of materials 

 intensity5 0.7 0.4 1.0 1.4 0.1 -1.9

 Contribution of purchased 

 business services intensity6 0.7 0.9 0.6 0.6 0.9 0.3

Multifactor productivity7 1.6 0.2 1.2 2.0 2.1 4.7
- 5 - 

1

Output per unit of combined labor hours, capital, energy, materials, and business services inputs.

2

The growth rate of each input is weighted by its share of nominal costs.

3

Hours at work of all persons.

Table C. Previous and revised productivity and related measures for the 2005-2006 and 2004-2005

periods

Sector

Multifactor 

productivity1

Sectoral 

output

Inputs

Combined

inputs2 Hours3 Capital services Energy Materials

Purchased 

business 

services

Percent change, 2005-2006

Manufacturing

Previous 1.6 1.8 0.3 0.6 0.5 -5.5 -1.0 2.0

Revised 2.5 1.6 -0.9 0.7 0.5 -6.7 -2.5 -1.2

Durable 

manufacturing

Previous 3.2 3.3 0.2 1.0 0.3 -6.5 -1.8 1.8

Revised 4.2 3.1 -1.0 1.1 0.4 -7.5 -4.0 -0.9

Nondurable 

manufacturing

Previous -0.2 0.3 0.5 0.1 0.7 -5.0 0.1 2.1

Revised 0.6 -0.1 -0.6 0.1 0.6 -6.3 -0.5 -1.5

Percent change, 2004-2005

Manufacturing

Previous 0.4 3.7 3.3 -1.1 0.0 9.1 5.9 7.8

Revised 0.0 3.6 3.5 -1.1 0.0 10.1 6.2 8.4

Durable 

manufacturing

Previous 2.5 5.2 2.6 -0.1 -0.2 2.8 5.9 4.8

Revised 2.4 5.0 2.6 -0.1 -0.2 2.9 5.4 5.2

Nondurable 

manufacturing

Previous -1.8 2.0 3.9 -2.8 0.0 12.8 4.9 11.1

Revised -2.4 2.0 4.5 -2.7 0.1 14.4 5.7 11.8
- 6 - 

TECHNICAL NOTES

Capital Input: Capital input measures the services derived from the stock of physical assets and 

software. The assets included are fixed business equipment, structures, inventories, and land. Among 

equipment, BLS provides additional detail for information processing equipment and software (IPES). 

IPES is composed of four broad classes of assets: computers and related equipment, software, 

communications equipment, and other IPES equipment. Computers and related equipment includes 

mainframe computers, personal computers, printers, terminals, tape drives, storage devices, and 

integrated systems. Software is comprised of pre-packaged, custom, and own-account software. 

Communications equipment is not further differentiated. Other IPES includes medical equipment and 

related instruments, electromedical instruments, nonmedical instruments, photocopying and related 

equipment, and office and accounting machinery. 

 The aggregate capital input measures are obtained by Tornqvist aggregation of the capital stocks 

for each asset type within each of the eighteen manufacturing NAICS industry groupings using 

estimated rental prices for each asset type. Each rental price reflects the nominal rate of return to all 

assets within the industry and rates of economic depreciation and revaluation for the specific asset; 

rental prices are adjusted for the effects of taxes. Data on investments in physical assets and software 

are obtained from Bureau of Economic Analysis (BEA). Nonfarm industry detail for land is based on 

IRS book value data. Current-dollar gross product originating (GPO) data, obtained from BEA, are used 

in estimating capital rental prices.

Labor Hours: Hours paid of production workers are obtained primarily from the Current Employment 

Statistics (CES) survey. The hours of these employees are then converted to an at-work basis by using 

information from the Employment Cost Index (ECI) of the National Compensation Survey (NCS) and 

the Hours at Work Survey. Hours at work for nonproduction workers are derived using data from the 

Current Population Survey (CPS), the CES, and the NCS. The hours at work of proprietors are derived 

from the CPS. The construction of hours at work follows the methods used in the private business 

sector described in USDL 09-0480, Multifactor Productivity Trends, 2008, 

http://www.bls.gov/news.release/pdf/prod3.pdf , except that hours in manufacturing are directly 

aggregated and do not include the effects of changing labor composition. 

 Hours at work data reflect Productivity and Costs data as of the March 5, 2009, news release. 

Therefore it reflects the benchmark revisions to the CES and other revisions to hours released on 

February 6, 2009. Data in this release do not reflect the comprehensive revision to the National Income 

and Product Accounts (NIPA) released by the Bureau of Economic Analysis of the U.S. Department of 

Commerce on July 31, 2009. 
- 7 - 

Intermediate Inputs: In manufacturing, intermediate inputs are the largest input in terms of costs. 

Furthermore, research has shown that substitution among inputs, including intermediate inputs, affects 

productivity change. Therefore, it is important to include intermediate inputs in productivity measures 

at the level of manufacturing. In contrast, the more aggregate productivity measures compare "valueadded" output with two classes of inputs, capital and labor. Because of these differences in concepts and 

methodology, productivity change in manufacturing cannot be directly compared with changes in 

private business or private nonfarm business. 

 Intermediate inputs (energy, materials, and purchased business services) are obtained from BEA 

based on BEA annual input-output tables. Tornqvist indexes of each of these three input classes are 

derived at the 3-digit NAICS level and then aggregated to total manufacturing. Materials inputs are 

adjusted to exclude transactions between establishments within the same sector.

Combined Inputs: The five input indexes (capital services, hours, energy, materials, and purchased 

business services) are combined using Tornqvist aggregation, employing weights that represent each 

component's share of total costs. Total costs are defined as the value of manufacturing sectoral output. 

The index uses changing weights; the share in each year is averaged with the preceding year's share.

Sectoral Output: The output concept used for multifactor productivity in manufacturing is “sectoral 

output.” Sectoral output equals gross output (sales, receipts, and other operating income, plus 

commodity taxes plus changes in inventories), but excludes transactions between establishments within 

the same sector. In contrast, the output concept used for private business and nonfarm business is “gross 

product originating” and is similar to “real value added”. Gross product originating in private business 

equals gross domestic product in the economy less general government, government enterprises, private 

households (including the rental value of owner-occupied real estate), and non-profit institutions. Gross 

product originating excludes intermediate transactions between businesses. 

 The output index for manufacturing is computed using a chained superlative index (Tornqvist) of 

three-digit NAICS industry outputs. Industry output is measured as sectoral output, the total value of 

goods and services leaving the industry. Wherever possible, the indexes of industry output are calculated 

with a Tornqvist formula. This formula aggregates the growth rates of the various industry outputs 

between two periods, using their relative shares in industry value of production averaged over the two 

periods as weights. Industry output measures for manufacturing industries are constructed using data 

from the economic censuses and annual surveys of the Bureau of the Census, U.S. Department of 

Commerce, together with information on price changes, primarily from BLS. 
- 8 - 

Productivity: The manufacturing multifactor productivity measures describe the relationship between 

output in real terms and the inputs involved in its production. Manufacturing multifactor productivity 

measures exclude intermediate inputs between manufacturing establishments from both output and 

inputs. Multifactor productivity does not measure the specific contributions of labor, capital, or any 

other factor of production. Rather, multifactor productivity is designed to measure the joint influences 

on economic growth of technological change, efficiency improvements, returns to scale, reallocation of 

resources due to shifts in factor inputs across industries, and other factors. The multifactor productivity 

indexes are derived by dividing an output index by an index of the combined inputs of labor, capital 

services, energy, non-energy materials, and business service inputs. 

Other information: Comprehensive tables containing additional data beyond the scope of this press 

release are available upon request at 202-691-5606 or at http://www.bls.gov/mfp/mprdload.htm . More 

detailed information on methods, limitations, and data sources of capital and labor are provided in BLS 

Bulletin 2178 (September 1983), Trends in Multifactor Productivity, 1948-81. Methods for measuring 

manufacturing multifactor productivity are discussed in "Measurement of productivity growth in U.S. 

manufacturing” in the July 1995 issue of the Monthly Labor Review. See 

http://www.bls.gov/mfp/mprgul95.pdf. More detailed data can be obtained from our web site at 

http://www.bls.gov/mfp or by request at 202-691-5606. 
- 9 - 

Table 1. Manufacturing sector: Productivity and related measures, 1988-2007

Percent change from previous year

Year

 

Productivity Inputs

Output per Output Purchased Combined 

hour of all per unit Multifactor Sectoral Capital business units of all

persons of capital Productivity1 Output Hours2 Services Energy Materials services Inputs3

1988 2.1 3.4 1.7 5.2 3.0 1.8 4.0 1.4 8.9 3.4

1989 1.0 -0.7 -0.6 1.7 0.6 2.3 -0.2 2.0 6.0 2.2

1990 2.2 -3.0 -0.7 -0.3 -2.5 2.7 2.1 1.5 1.8 0.4

1991 2.6 -4.0 -0.3 -1.7 -4.2 2.4 -0.3 -0.6 -0.7 -1.4

1992 3.8 0.9 -0.6 3.3 -0.5 2.4 -1.0 8.6 7.1 3.9

1993 2.6 1.3 2.7 3.9 1.3 2.5 3.2 0.9 0.2 1.2

1994 3.5 3.2 2.7 6.0 2.3 2.7 3.1 3.9 3.7 3.1

1995 4.6 1.6 1.8 5.3 0.7 3.6 3.0 5.3 4.9 3.4

1996 3.6 -0.6 0.5 3.4 -0.2 4.1 -2.9 9.0 -0.4 2.9

1997 5.5 2.7 2.8 7.4 1.8 4.6 -1.9 8.0 4.1 4.4

1998 5.4 0.2 2.3 5.2 -0.3 5.0 -2.6 5.3 3.2 2.9

1999 4.5 -0.3 0.8 3.8 -0.7 4.1 0.1 5.1 5.3 3.0

2000 4.1 -0.4 3.5 2.7 -1.3 3.1 -5.2 -2.6 0.0 -0.7

2001 1.6 -6.5 -1.3 -5.1 -6.5 1.5 -9.4 -6.7 0.7 -3.8

2002 6.9 -1.2 3.7 -0.7 -7.1 0.6 -1.5 -5.3 -2.5 -4.3

2003 6.3 1.0 2.9 1.1 -4.9 0.0 -5.5 -0.8 0.9 -1.8

2004 2.3 2.3 2.7 1.8 -0.5 -0.6 -0.5 -0.5 -2.1 -0.9

2005 4.7 3.6 0.0 3.6 -1.1 0.0 10.1 6.2 8.4 3.5

2006 0.8 1.1 2.5 1.6 0.7 0.5 -6.7 -2.5 -1.2 -0.9

2007 3.4 1.1 4.7 1.6 -1.7 0.5 -2.7 -8.1 -0.3 -3.0

1

Output per unit of combined labor hours, capital, energy, materials, and business services inputs.

2

Hours at work of all persons.

3

Combined units of capital services, hours, energy, non-energy materials, and purchased business services, superlative chained index.

Source: Output data are from the Bureau of the Census, U.S. Department of Commerce, and modified by the Bureau of 

Labor Statistics, U.S. Department of Labor. Compensation and hours data are from the Bureau of Labor Statistics. Capital 

measures are based on data supplied by the Bureau of Economic Analysis. See also Technical Notes in this release.

 

 

 

 

 
- 10 - 

Table 2. Manufacturing sector: Productivity and related measures, 1987-2007

Indexes 

(2000=100)

Productivity Inputs

Output per Output Purchased Combined 

hour of all per unit Multifactor Sectoral Capital business units of all

Year persons of capital Productivity1 Output Hours2 Services Energy Materials services Inputs3

1987 64.0 96.1 84.9 64.0 100.1 66.6 99.1 63.0 65.2 75.4

1988 65.3 99.4 86.4 67.4 103.1 67.8 103.1 63.9 71.0 78.0

1989 66.0 98.7 85.9 68.5 103.8 69.4 102.9 65.2 75.2 79.7

1990 67.5 95.8 85.3 68.2 101.2 71.3 105.0 66.1 76.6 80.0

1991 69.2 92.0 85.0 67.1 96.9 72.9 104.7 65.7 76.0 78.9

1992 71.8 92.8 84.5 69.3 96.4 74.7 103.7 71.4 81.4 82.0

1993 73.7 94.0 86.7 72.0 97.7 76.6 107.0 72.0 81.6 83.0

1994 76.3 97.0 89.1 76.3 100.0 78.6 110.4 74.8 84.6 85.6

1995 79.8 98.5 90.7 80.3 100.7 81.5 113.7 78.8 88.8 88.5

1996 82.7 97.9 91.2 83.0 100.4 84.8 110.4 85.9 88.4 91.1

1997 87.2 100.5 93.8 89.2 102.3 88.7 108.2 92.8 92.0 95.1

1998 91.9 100.7 95.9 93.8 102.0 93.2 105.4 97.7 95.0 97.8

1999 96.1 100.4 96.6 97.3 101.3 97.0 105.5 102.6 100.0 100.7

2000 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

2001 101.6 93.5 98.7 94.9 93.5 101.5 90.6 93.3 100.7 96.2

2002 108.6 92.4 102.4 94.3 86.8 102.1 89.3 88.4 98.3 92.1

2003 115.4 93.3 105.3 95.3 82.6 102.1 84.4 87.7 99.1 90.5

2004 118.0 95.5 108.1 97.0 82.2 101.6 84.0 87.3 97.0 89.7

2005 123.6 98.9 108.1 100.4 81.3 101.5 92.5 92.7 105.2 92.9

2006 124.6 100.0 110.8 102.0 81.9 102.0 86.3 90.4 103.9 92.0

2007 128.8 101.1 116.0 103.6 80.4 102.5 84.0 83.1 103.5 89.3

1

Output per unit of combined labor hours, capital, energy, materials, and business services inputs.

2

Hours at work of all persons.

3

Combined units of capital services, hours, energy, non-energy materials, and purchased business services, superlative chained index.

Source: Output data are from the Bureau of the Census, U.S. Department of Commerce, and modified by the Bureau of 

Labor Statistics, U.S. Department of Labor. Compensation and hours data are from the Bureau of Labor Statistics. Capital 

measures are based on data supplied by the Bureau of Economic Analysis. See also Technical Notes in this release.

 

 

 

 

 

 

 

 

 
- 11 - 

Table 3. Multifactor productivity measures for manufacturing industries in selected periods, 1987-2007

Compound average annual growth rates 

 

Industry 

1987- 

2007

1987- 

1990

1990- 

1995 

1995- 

2000 

2000- 

2007

2006- 

2007

Manufacturing 1.6 0.2 1.2 2.0 2.1 4.7 

Nondurable manufacturing 0.3 -0.6 0.7 -0.3 1.0 3.0 

Food, beverage, and tobacco products -0.1 -1.7 1.5 -1.9 0.7 3.5

Textile mills and textile product mills 0.9 1.0 0.7 1.2 0.7 -2.7

Apparel, leather, and allied products 0.2 0.1 2.8 0.7 -1.9 -17.1

 

Paper products 0.4 -0.4 -0.1 0.1 1.3 -0.2

Printing and related support activities 0.6 0.7 -0.3 0.3 1.4 1.8

Petroleum and coal products -0.3 -0.1 0.6 0.2 -1.5 -4.0

Chemical products 0.7 -1.0 -0.8 -0.1 3.1 12.0

Plastics and rubber products 0.6 0.7 0.6 1.2 0.1 1.7

Durable manufacturing 2.5 0.8 1.6 3.6 3.1 6.0 

Wood products 0.2 1.0 -1.2 0.1 1.1 4.5

Nonmetallic mineral products 0.8 0.3 1.0 0.8 0.9 3.3

Primary metals 1.0 1.1 0.1 0.5 1.9 5.6

Fabricated metal products 0.7 -0.1 1.0 0.1 1.3 4.8

Machinery 0.1 1.0 -1.7 -0.7 1.7 3.1

Computer and electronic products 9.8 5.6 9.6 15.9 7.4 9.2

Electrical equipment, appliances, and components -0.4 -2.2 -2.0 -1.1 2.1 1.4

Transportation equipment 0.6 -1.7 -0.3 0.3 2.6 6.5

Furniture and related products 0.6 -0.8 0.7 0.5 1.4 1.8

Miscellaneous manufacturing 1.4 2.4 0.3 1.7 1.5 -0.1

Note: Multifactor productivity measures by industry do not sum up to aggregate manufacturing measures because industry measures exclude 

transactions only within the specific industry while the aggregate manufacturing measures also exclude transactions between all 

manufacturing industries.