Internet address: http://www.bls.gov/mfp USDL 08-0410 

Historical, technical For Release 10:00 AM EDT 

information: (202) 691-5606 Thursday, March 27, 2008 

Media contact: (202) 691-5902 

 

MULTIFACTOR PRODUCTIVITY TRENDS, 2006 

Private Business and Private Nonfarm Business 

Multifactor productivity, defined as output per combined units of labor and capital inputs, 

grew at an annual rate of 0.5 percent in the private business sector and 0.4 percent in the private 

nonfarm business sector for 2006, the Bureau of Labor Statistics (BLS) and the U.S. Department 

of Labor reported today. 

 

 2005-06 

Private business sector 0.5 

 Private nonfarm business sector 0.4 

The estimates of multifactor productivity in the private business and in the private nonfarm 

business sectors for 2006 both show the slowest annual rates of growth since 2001. The 2005-06 

annual changes are summarized in table A, and further detail and historical measures are shown 

in tables 1 through 6. The 0.5 percent change in multifactor productivity growth for the private 

business sector is less than half of the preliminary 1.1 percent change reported on May 24, 2007 

based on preliminary information. This was largely due to a sharp downward revision to output. 

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

technological change, efficiency improvements, returns to scale, reallocation of resources, and 

other factors, allowing for the effects of capital and labor. Multifactor productivity, therefore, 

differs from the 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. Additionally, multifactor productivity measures for the private 

business and private nonfarm business sectors account for shifts in the composition of labor. 

Estimates of labor composition are not included in the quarterly labor productivity measures. 

In private business and private nonfarm business, the change in multifactor productivity 

reflects the difference between the change in real gross domestic product for the sector and the 

change in labor and capital inputs engaged in the production of this output. The output measures 

for private business and private nonfarm business are similar to the indexes of output for 

business and nonfarm business used in the quarterly labor productivity measures differing only 

in that the output of government enterprises is omitted. 
2

A change in multifactor productivity reflects the change in output that cannot be accounted 

for by the change in combined inputs of labor and capital. In contrast, a change in labor 

productivity reflects the change in output that cannot be accounted for by the change in hours of 

all persons engaged in production. 

Private business sector 

Chart 1 shows the annual indexes of multifactor productivity, output per hour worked, and 

output per unit of capital services during the 1987-2006 period for the private business sector. 

Over the last 19 years, capital services have grown more rapidly than hours in private business, 

and the skills of workers -- as measured by their education and work experience -- also have 

risen over this period. These shifts toward more capital intensive production and toward workers 

with more human capital have supplemented labor productivity growth, usually allowing output 

per hour to grow at a faster rate than multifactor productivity. 

Chart 1. Output per hour of all persons, output per unit of capital, and multifactor productivity 

in the private business sector, 1987 to 2006

50

70

90

110

130

150

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Year

Index (1987=100)

Multifactor productivity

Output per unit of capital

Output per hour of all persons

Multifactor productivity rose 0.5 percent in 2006 (see table A). The multifactor 

productivity gain in 2006 reflected a 3.2 percent increase in output and a 2.6 percent increase in 

the combined inputs of capital and labor (see table 3). 

Continuing the relatively slow growth of the last five years, growth in capital services rose 

2.7 percent. However, labor input rose 2.6 percent, the largest annual increase since 1999. 

Hours rose 2.1 percent. The capital-labor ratio (capital services per hour of all persons) 

increased by 0.6 percent, the lowest rate of growth since 1994.
3

Equipment capital services grew 4.7 percent in 2006, much more rapidly than other broad 

categories of capital assets (see table 5). Within equipment, services of computers and related 

equipment grew 16.8 percent, software 5.7 percent, communication equipment 5.1 percent, other 

information processing equipment 4.9 percent, and all other equipment 2.7 percent. The rates of 

increase continue to be markedly lower than the huge increases in information processing 

equipment and software observed in the 1995-2000 period. The lone exception is other 

information processing equipment. 

 Services of structures grew 0.9 percent in 2006, continuing their relatively low rate of 

growth for the last four years. Inventories grew at an annual rate of 2.3 percent in 2006, down 

from 3.1 percent in 2005. 

Table A. Productivity and related data, percent changes 2005-06 

Private 

Business1

Private Nonfarm 

Business1

Productivity

 Multifactor Productivity

2 0.5 0.4

 Output per hour of all persons 1.1 1.0

 Output per unit of capital services 0.5 0.4

Output 3.2 3.2

Inputs

 Labor input3 2.6 2.7

 Hours 2.1 2.2

 Labor Composition4 0.5 0.5

 Capital services 2.7 2.8

 Combined units of labor and capital inputs5 2.6 2.8

Analytic ratio:

 Capital services per hour of all persons 0.6 0.6 1

 Excludes government enterprises. 

2

 Output per unit of combined labor and capital inputs. 

3

 Index of hours at work; hours at work by education and experience group are weighted by each 

 group’s share of labor compensation. 

4

 Ratio of labor input to hours. 

5

 Labor input index combined with capital service input index, weighted by labor's and capital's 

 shares of nominal output.

Labor input reflects the change in hours at work adjusted for the effects of changing labor 

composition. As mentioned previously, labor input rose 2.6 percent. This increase in labor input 

was due to an increase in hours at work of 2.1 percent and a contribution from labor composition 

of 0.5 percent (see table A). Changes in labor composition, as measured by shifts in the 

educational attainment and work experience of the work force, showed the largest rate of growth 

since 2002. See “Changes in the Composition of Labor for the BLS Multifactor Productivity 

Measures, 2006”, available at http://www.bls.gov/mfp/mprlabor.pdf . 
4 

Labor productivity (output per hour worked) increased 1.1 percent, the fourth consecutive 

year in which the growth rate of labor productivity decelerated. Capital productivity (output per 

unit of capital services) grew 0.5 percent, the fourth consecutive annual increase. 

Private nonfarm business sector

Multifactor productivity in the private nonfarm business sector rose 0.4 percent in 2006 

(see table A), the slowest rate of growth since 2001. Output increased 3.2 percent, and the 

combined inputs of capital and labor increased 2.8 percent. 

Labor input grew faster in 2006 than the previous year, 2.7 percent, compared to 1.8 

percent in 2005. Capital services grew 2.8 percent, compared to 2.6 percent in 2005. Within 

capital services, equipment was the fastest growing component (see table 6). The increase in 

equipment in 2006 was largely due to capital services of information processing equipment and 

software rising by 7.1 percent. As in previous years, the fastest growth in equipment was in 

computers and related equipment, which grew 16.8 percent. 

Labor productivity grew 1.0 percent and capital productivity rose 0.4 percent. Capital 

services per hour increased at the rate of 0.6 percent. 

Historical trends in the private business and private nonfarm business sectors 

Labor productivity (output per hour worked) differs from multifactor productivity (output 

per unit of combined capital and labor inputs) in the treatment of both capital and hours. Labor 

productivity measures do not explicitly account for the effects of capital nor do they account for 

changes in the composition of labor on output growth. As a result, changes in capital intensity 

(the capital-hours ratio) and labor composition can influence labor productivity growth. In 

addition, the labor input measure used to calculate multifactor productivity reflects the combined 

effects of changes in hours at work and of shifts in the educational attainment and experience of 

the work force. Therefore, multifactor productivity accounts for changes in labor composition as 

well. Historical trends in labor productivity growth can be viewed as the sum of three 

components: multifactor productivity growth, the contribution of increased capital intensity, and 

the contribution of shifts in labor composition. 

The relationship between labor productivity growth and these three components can be 

seen in table B and chart 2. Chart 2 clearly shows the major changes in the relative contributions 

of multifactor productivity and of capital intensity in the latter half of the 1990’s. These 

contributions have continued to be relatively high for the 2000-2006 period. 

The contribution of capital intensity equals the change in the capital-hours ratio multiplied 

by capital's share of total payments to inputs. The contribution of labor composition equals the 

difference between the growth rate of labor input and the growth rate of hours multiplied by 

labor's share of total payments. Historically, capital's share has been slightly less than a third of 

total payments. 
5

The description that follows focuses exclusively on the private business sector. Trends in 

the private nonfarm business sector were similar to those in the private business sector in each 

period. 

Over the 1987-2006 period, output per hour worked grew at an annual rate of 2.3 percent 

in private business (see table B). Of the 2.3 percent growth rate in labor productivity, 1.0 percent 

can be attributed to increases in multifactor productivity, 0.8 percent to the contribution of 

capital intensity, and 0.4 percent to changes in labor composition. Output per hour worked 

accelerated from a 1.5 percent growth rate in the 1990-95 period to 2.7 percent in the 1995-2000 

period. For the 2000-06 period, output per hour grew around the same rate as the previous 

period, 2.8 percent. 

Over the 1987-1990 and 1990-1995 periods, all productivity measures showed similar 

rates of growth. Multifactor productivity increased at an average annual rate of 0.6 percent in the 

1987-1990 period while rising 0.5 percent in the 1990-1995 period. Labor productivity grew at 

an average annual rate of 1.6 percent during the 1987-1990 period while rising 1.5 percent in the 

1990-1995 period. In both periods, increasing capital intensity contributed 0.6 percent of which 

0.5 percent came from information processing equipment. The contribution of labor composition 

was the same in the two time periods, 0.4 percent. 

In the latter half of the 1990s, productivity growth accelerated. Multifactor productivity 

growth increased 1.3 percent, and output per hour growth increased 2.7 percent, a sharp increase 

from the previous period. The contribution of capital intensity almost doubled from the 1990-95 

period, rising an average of 1.1 percent. The growth in each of the two components of the 

contribution of capital intensity, information processing equipment and other capital services, 

doubled from the previous period. In both time periods, the contribution of information 

processing equipment was a little over 80 percent of the total contribution of capital services. 

The contribution of information processing equipment rose to 0.9 percent, while the contribution 

of other capital services grew 0.2 percent. The contribution of labor composition dropped 0.1 

percentage point from the previous period, to 0.3 percent. 

In the 2000-2006 period, multifactor productivity growth increased an additional 0.2 

percentage points from the 1995-2000 period, to 1.5 percent. Labor productivity rose an average 

of 2.8 percent per year. The contribution of capital intensity dropped 0.2 percentage points from 

the previous period to 0.9 percent. The contribution of information processing equipment 

dropped to 0.6 percent from 0.9 percent in the 1995-2000 period. At the same time, the 

contribution of other capital services rose to 0.3 percent. The contribution of labor composition 

growth increased to 0.4 percent. 
6 

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

contributions of capital intensity, labor composition, and multifactor productivity, by major 

sector, 1987 to 2006 

(percent per year) 

1987-06 1987-90 1990-95 1995-00 2000-06 2005-06

Private business1

Output per hour of all persons 2.3 1.6 1.5 2.7 2.8 1.1

Contribution of capital intensity2 0.8 0.6 0.6 1.1 0.9 0.2

 Contribution of information 

 processing equipment and 

 software3

0.6 0.5 0.5 0.9 0.6 0.3

 Contribution of all 

 other capital services 

0.2 0.2 0.1 0.2 0.3 -0.2

Contribution of labor composition4 0.4 0.4 0.4 0.3 0.4 0.3

Multifactor productivity5 1.0 0.6 0.5 1.3 1.5 0.5

Private nonfarm business1

Output per hour of all persons 2.2 1.5 1.6 2.5 2.7 1.0

Contribution of capital intensity2 0.8 0.6 0.6 1.1 0.9 0.2

 Contribution of information 

 processing equipment and 

 software3

0.6 0.5 0.5 0.9 0.6 0.3

 Contribution of all 

 other capital services 

0.2 0.1 0.1 0.2 0.3 -0.1

Contribution of labor composition4 0.4 0.4 0.4 0.3 0.4 0.3

Multifactor productivity5 1.0 0.5 0.5 1.1 1.5 0.4

 Contribution of R&D to 

 multifactor productivity 

0.2 0.2 0.2 0.2 0.2 0.2 

1

 Excludes government enterprises. 

2

 Growth rate in capital services per hour multiplied by capital's share of current dollar costs. 3

 Growth rate of information processing equipment and software per hour multiplied by its share of total costs. 

4

 Growth rate of labor composition (the growth rate of labor input less the growth rate of the hours of all persons) 

 multiplied by labor's share of current dollar costs. 

5

 Output per unit of combined labor and capital inputs. 

Note: Multifactor productivity plus contribution of capital intensity and labor composition may not sum to output 

per hour due to independent rounding. Contribution of information processing equipment and all other capital may 

not sum to the contribution of capital intensity due to independent rounding. 
7

Chart 2. Contributors to growth in output per hour 

in the private business sector 1987-2006

0.8 0.6 0.6

1.1 0.9

0.4

0.4

0.3

0.4

1.0

0.6 0.5

1.3 1.5

0.4

0.0

0.5

1.0

1.5

2.0

2.5

3.0

1987-06 1987-90 1990-95 1995-00 2000-06

Time Period

 Percentage Points

Multifactor

Productivity

Contribution of

labor composition

Contribution of

capital intensity

 

Note: Multifactor productivity plus contribution of capital intensity and labor composition may not sum to output 

per hour due to independent rounding. 

Contribution of research and development to multifactor productivity in the private 

nonfarm business sector 

While multifactor productivity reflects many influences, technological change is one of the 

primary contributors. For the private nonfarm business sector, BLS also reports estimates of the 

impact on multifactor productivity growth of firms' spending for research and development 

(R&D) on all firms within the same industries. Because many people associate research and 

development spending and the resulting technological improvements with productivity, 

multifactor productivity has not been adjusted to exclude the effects of research and 

development. The contribution of research and development averaged 0.2 percent per year for 

the entire 1987-2006 period, or about 20 percent of total multifactor productivity growth (see 

table B). The contribution of research and development did not vary measurably over time, 

contributing 0.2 percent per year during each time period. Tables of contributions of research 

and development to multifactor productivity in the private nonfarm business sector can be found 

at http://www.bls.gov/mfp/rdtable.pdf. 
8 

Notes 

Private business and private nonfarm business output series through 2006 reflect the 

annual revisions to the National Income and Product Accounts (NIPA), announced by the Bureau 

of Economic Analysis (BEA) in August 2007. 

Multifactor productivity measures for the private business and private nonfarm business 

sectors are developed from data based on the 1997 North American Industry Classification 

System (NAICS). These measures are not comparable with the measures for the private business 

and private nonfarm business sectors previously developed using data on a 1987 Standard 

Industrial Classification (SIC) basis. This is because major sector multifactor productivity 

measures are aggregated from industry detail data that are largely unavailable on a NAICS basis 

before 1987. In addition, the hours of proprietors and unpaid family workers, compensation, and 

measures of labor composition, which are collected on a 2002 NAICS basis, are converted to a 

1997 NAICS basis for this report. 

BLS built multifactor productivity measures from three-digit NAICS detail. Most critical 

data were not reported on a NAICS basis for years prior to 1998. Detailed GDP by industry data, 

are available from 1998 forward, but from 1987-1997, many of the income components needed 

to construct capital rental prices were obtained by applying 1997 SIC-to-NAICS conversion 

factors to SIC data and adjusting to the resulting NAICS totals. A similar procedure was applied 

to manufacturing inventories. Detailed nonmanufacturing inventories were constructed using 

total inventory for the private business sector and nonmanufacturing industry shares of total 

inventory derived from the IRS book value of inventories reported for NAICS industries. Land 

data were only available from 1998 to 2004 on a NAICS basis. As a consequence, land 

estimates from 1987 to 1997 were calculated using a combination of SIC to NAICS conversion 

factors and more detailed IRS data. Data for 2005 and 2006 were extrapolated using detailed 

IRS data for 2004. 

The Bureau of Labor Statistics has used Current Population Survey (CPS) data to 

measure the hours of nonfarm proprietors and unpaid family workers and all persons working in 

the farm sector using the hours worked by people whose main job falls into these categories. 

Since the Productivity and Costs news release of June 2005, hours for primary and secondary 

jobs held by persons working more than one job were processed separately and assigned to the 

appropriate class of worker for each job, rather than assigning all hours to the primary job. 

Hours worked in a second job as a nonfarm employee by a proprietor (or other selected category 

of worker for whom our source is the CPS) were deducted to avoid double-counting. 

Conversely, hours worked as a proprietor in a secondary job by a person who is primarily an 

employee were included. This multiple-jobholder adjustment yielded an improved measure of 

hours at work by sector and industry and the employment series approximated a count of jobs 

rather than persons. 

Labor composition measures have been updated through 2006. A brief description, 

“Changes in the Composition of Labor for the BLS Multifactor Productivity Measures, 2006” is 

available at http://www.bls.gov/mfp/mprlabor.pdf . 
9

Comprehensive tables containing additional data not included in this news release are 

available at http://www.bls.gov/mfp/mprdload.htm or in print upon request. 

Summary of Methods 

The following note describes the major data sources and the procedures used in deriving 

BLS multifactor productivity indexes. More detailed information on methods, limitations, and 

data sources is provided in BLS Bulletin 2178 (September 1983), "Trends in Multifactor 

Productivity, 1948-81.", and on the BLS Multifactor Productivity website under the title 

“Technical Information About the BLS Multifactor Productivity Measures for Major Sectors and 

18 NAICS 3-digit Manufacturing Industries” at http://www.bls.gov/mfp/mprtech.pdf . General 

information is available on the BLS Multifactor Productivity website at 

http://www.bls.gov/mfp/home.htm#overview . Additional data not contained in the release can 

be obtained in print or at http://www.bls.gov/mfp. Included in the additional data available in the 

home page is a zip file containing selected multifactor productivity data that links 1948-1987 

SIC data to NAICS data from 1987 forward. This file includes data for the private business and 

private nonfarm business sectors. 

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 prepackaged, 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. Structures include nonresidential structures and residential capital that is 

rented out by profit-making firms or persons. 

Financial assets are excluded from capital input measures, as are owner-occupied 

residential structures. The aggregate capital input measures are obtained by Tornqvist 

aggregation of the capital stocks for each asset type within each of 60 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. Current-dollar capital costs can 

be defined as each asset’s rental price multiplied by its constant-dollar stock, adjusting for capital 

composition effects. Data on investments in physical assets are obtained from BEA. Data on 

inventories are obtained from BEA using additional information from IRS Corporation Income 

Returns. Estimates for land in the farm sector are obtained from USDA. Nonfarm industry 

detail is based on IRS book value data. Current-dollar gross product originating (GPO) data, 

obtained from BEA, are used in estimating capital rental prices. 
10 

Labor Input: Labor input in private business and private nonfarm business is obtained 

by chained superlative (Tornqvist) aggregation of the hours at work by all persons, classified by 

education, work experience, and gender with weights determined by their shares of labor 

compensation. Hours paid of employees are largely obtained from CES. These hours of 

employees are then converted to an at-work basis by using information from the Employment 

Cost Index (ECI) of the National Compensation Survey and the Hours at Work Survey. Hours at 

work for nonproduction and supervisory workers are derived using data from the CPS, the CES, 

and the NCS. The hours at work of proprietors, unpaid family workers, and farm employees are 

derived from the Current Population Survey. Hours at work data reflect Productivity and Costs 

data as of the March 5, 2008 news release. Therefore it reflects the benchmark revisions to the 

CES survey and other revisions to hours released on February 1, 2008. The growth rate of labor 

composition is defined as the difference between the growth rate of weighted labor input and the 

growth rate of the hours of all persons. Additional information concerning data sources and 

methods of measuring labor composition can be found in BLS Bulletin 2426 (December 1993), 

"Labor Composition and U.S. Productivity Growth, 1948-90." 

Combined Inputs: Labor and capital input are combined using Tornqvist weights that 

represent each component's share of total costs. Total costs are defined as the value of output 

(Gross Product Originating) less a portion of taxes on production and imports. Most taxes on 

production and imports, such as excise taxes, are excluded from costs; however, property and 

motor vehicle taxes remain in total costs. The index uses changing weights: The share in each 

year is averaged with the preceding year's share. 

Output: This release presents data for the private business and private nonfarm business 

sectors. The private business sector, which accounted for approximately 77 percent of gross 

domestic product in 2000, includes all of gross domestic product except the output of general 

government, government enterprises, non-profit institutions, the rental value of owner-occupied 

real estate, and the output of paid employees of private households. Additionally, the private 

nonfarm business sector excludes farms from the private business sector, but includes 

agricultural services. Multifactor measures exclude government enterprises, while the BLS 

quarterly Productivity and Cost series include them. 

 

Multifactor Productivity: Multifactor productivity measures describe the relationship 

between output in real terms and the inputs involved in its production. They do not measure the 

specific contributions of labor, capital, or any other factor of production. Rather, multifactor 

productivity is designed to measure the joint influences of output, capital, and labor 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 for private business and private nonfarm business are 

derived by dividing an output index by an index of labor input and capital services. The output 

indexes are computed as chained superlative indexes (Fisher Ideal indexes) of components of 

real output. For the years 1987 to 2006, BEA supplies the output indexes. BLS adjusts these to 

remove the output of government enterprises. 
11

Research and development: The stock of research and development in private nonfarm 

business is derived by cumulating constant dollar measures of research and development 

expenditures and allowing for depreciation. Current dollar expenditures for privately financed 

research and development for the years 1987-2006 are obtained from annual issues of Research 

and Development in Industry published by the National Science Foundation. BLS develops 

price deflators and estimates of the rate of depreciation. Further description of these data and 

methods can be found in BLS Bulletin 2331 (September 1989), "The Impact of Research and 

Development on Productivity Growth." BLS measures of the stock of research and development 

are available upon request. 
12

Table 1. Private business sector: Indexes of productivity and related measures, 1987-20061

Indexes 2000=100 

Productivity Inputs 

Year 

Output per 

hour of all 

persons 

Output 

per unit 

of capital 

Multifactor 

Productivity2 Output3

Labor

Input4

Capital 

Services5

Combined 

units of labor 

and capital6

Capital per 

hour of all 

persons 

1987 77.3 107.1 89.8 62.4 75.5 58.3 69.5 72.2 

1988 78.5 107.7 90.5 65.2 78.1 60.5 72.0 72.9 

1989 79.3 107.5 90.8 67.6 80.6 62.9 74.4 73.7 

1990 81.0 105.9 91.3 68.6 80.5 64.8 75.1 76.5 

1991 82.4 102.3 90.7 68.1 79.4 66.6 75.1 80.6 

1992 85.9 104.2 93.1 70.9 80.2 68.1 76.2 82.5 

1993 86.4 104.3 93.3 73.2 82.6 70.2 78.4 82.8 

1994 87.2 105.8 94.0 76.8 86.3 72.7 81.7 82.5 

1995 87.4 104.6 93.7 79.2 88.8 75.7 84.4 83.6 

1996 90.0 104.7 95.3 82.8 90.7 79.1 86.9 85.9 

1997 91.7 104.9 96.2 87.2 94.2 83.2 90.6 87.4 

1998 94.3 103.5 97.5 91.5 96.4 88.4 93.9 91.1 

1999 97.2 102.3 98.7 96.2 99.0 94.1 97.5 95.0 

2000 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 

2001 102.8 96.0 100.1 100.5 98.6 104.6 100.3 107.0 

2002 107.1 94.8 101.8 102.0 97.2 107.6 100.2 112.9 

2003 111.2 95.6 104.4 105.2 97.0 110.0 100.7 116.3 

2004 114.5 97.5 107.0 109.7 98.4 112.5 102.5 117.4 

2005 116.8 98.6 108.8 113.8 100.2 115.4 104.6 118.4 

2006 118.0 99.1 109.4 117.4 102.8 118.5 107.4 119.1 

See footnotes following table 4. Source: Bureau of Labor Statistics 
13

Table 2. Private nonfarm business sector: Indexes of productivity and related measures, 1987-20061

Indexes 2000=100 

Productivity Inputs 

Year 

Output per 

hour of all 

persons 

Output 

per unit 

of capital 

Multifactor 

Productivity2 Output3

Labor

Input4

Capital 

Services5

Combined 

units of labor 

and capital6

Capital per 

hour of all 

persons 

 

1987 78.0 108.9 90.8 62.4 74.7 57.3 68.8 71.6 

1988 79.3 109.9 91.6 65.3 77.5 59.4 71.3 72.2 

1989 79.9 109.4 91.7 67.6 80.0 61.8 73.8 73.0 

1990 81.4 107.5 92.0 68.6 80.1 63.8 74.6 75.7 

1991 82.9 103.6 91.4 68.1 78.9 65.7 74.5 80.0 

1992 86.3 105.2 93.5 70.8 79.8 67.3 75.7 82.0 

1993 86.7 105.5 93.8 73.2 82.3 69.4 78.1 82.2 

1994 87.7 106.7 94.5 76.7 85.7 71.9 81.2 82.2 

1995 88.2 105.6 94.5 79.3 88.2 75.0 83.9 83.5 

1996 90.5 105.5 95.9 82.8 90.2 78.5 86.4 85.8 

1997 92.0 105.3 96.5 87.2 93.9 82.7 90.3 87.3 

1998 94.5 103.9 97.8 91.5 96.2 88.1 93.6 91.0 

1999 97.3 102.5 98.8 96.3 99.0 93.9 97.4 94.9 

2000 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 

2001 102.7 96.0 100.1 100.5 98.7 104.7 100.5 107.0 

2002 107.1 94.7 101.8 102.1 97.2 107.8 100.2 113.1 

2003 111.0 95.4 104.3 105.2 97.1 110.3 100.8 116.4 

2004 114.2 97.3 106.8 109.6 98.6 112.7 102.6 117.4 

2005 116.4 98.3 108.6 113.7 100.4 115.6 104.7 118.4 

2006 117.6 98.7 109.0 117.4 103.1 118.9 107.6 119.1 

See footnotes following table 4. Source: Bureau of Labor Statistics 
14

 Table 3. Private business sector: Compound average annual rates of growth in productivity and 

related measures, 1988-20061 

Percent per year 

Productivity Inputs 

Year 

Output per 

hour of all 

persons 

Output 

per unit 

of capital 

Multifactor 

Productivity2 Output3

Labor

Input4

Capital 

Services5

Combined 

units of labor 

and capital6

Capital per 

hour of all 

persons 

1988 1.6 0.6 0.7 4.4 3.6 3.8 3.6 1.0 

1989 1.0 -0.2 0.3 3.7 3.1 3.9 3.4 1.2 

1990 2.2 -1.5 0.6 1.5 -0.1 3.1 0.9 3.8 

1991 1.7 -3.4 -0.7 -0.7 -1.3 2.8 0.0 5.3 

1992 4.3 1.8 2.6 4.1 1.0 2.2 1.4 2.4 

1993 0.5 0.1 0.2 3.2 2.9 3.1 3.0 0.4 

1994 1.0 1.4 0.8 5.0 4.5 3.5 4.2 -0.4 

1995 0.2 -1.1 -0.3 3.0 2.9 4.2 3.3 1.4 

1996 2.9 0.1 1.7 4.6 2.1 4.5 2.9 2.8 

1997 1.9 0.2 0.9 5.3 4.0 5.2 4.4 1.7 

1998 2.8 -1.3 1.3 4.9 2.3 6.3 3.5 4.2 

1999 3.1 -1.2 1.3 5.2 2.7 6.5 3.8 4.3 

2000 2.9 -2.2 1.3 3.9 1.0 6.3 2.6 5.2 

2001 2.8 -4.0 0.1 0.5 -1.4 4.6 0.3 7.0 

2002 4.2 -1.3 1.7 1.5 -1.4 2.9 -0.1 5.5 

2003 3.9 0.9 2.6 3.1 -0.3 2.3 0.5 3.0 

2004 2.9 1.9 2.5 4.3 1.5 2.3 1.7 1.0 

2005 2.0 1.2 1.6 3.7 1.8 2.5 2.1 0.8 

2006 1.1 0.5 0.5 3.2 2.6 2.7 2.6 0.6 

See footnotes following table 4. Source: Bureau of Labor Statistics 
15

Table 4. Private nonfarm business sector: Compound average annual rates of growth in productivity 

and related measures, 1988-20061 

Percent per year 

Productivity Inputs 

Year 

Output per 

hour of all 

persons 

Output 

per unit 

of capital 

Multifactor 

Productivity2 Output3

Labor

Input4

Capital 

Services5

Combined 

units of labor 

and capital6

Capital per 

hour of all 

persons 

1988 1.7 0.9 0.9 4.6 3.7 3.7 3.7 0.8 

1989 0.7 -0.4 0.1 3.5 3.2 4.0 3.4 1.2 

1990 1.9 -1.8 0.4 1.5 0.1 3.3 1.1 3.8 

1991 1.8 -3.6 -0.7 -0.8 -1.4 2.9 -0.1 5.6 

1992 4.1 1.5 2.4 3.9 1.1 2.4 1.5 2.6 

1993 0.5 0.2 0.3 3.5 3.2 3.2 3.2 0.3 

1994 1.1 1.2 0.8 4.8 4.1 3.6 4.0 0.0 

1995 0.6 -1.0 0.0 3.3 2.9 4.3 3.4 1.5 

1996 2.6 -0.2 1.4 4.5 2.3 4.7 3.0 2.8 

1997 1.6 -0.1 0.7 5.2 4.1 5.3 4.5 1.7 

1998 2.8 -1.3 1.3 5.0 2.4 6.5 3.7 4.2 

1999 2.9 -1.3 1.1 5.2 2.9 6.6 4.1 4.3 

2000 2.8 -2.5 1.2 3.8 1.0 6.5 2.6 5.4 

2001 2.7 -4.0 0.1 0.5 -1.3 4.7 0.5 7.0 

2002 4.2 -1.4 1.7 1.5 -1.5 3.0 -0.2 5.7 

2003 3.7 0.8 2.5 3.1 -0.2 2.3 0.6 3.0 

2004 2.8 2.0 2.4 4.2 1.6 2.2 1.8 0.8 

2005 2.0 1.1 1.6 3.7 1.8 2.6 2.0 0.9 

2006 1.0 0.4 0.4 3.2 2.7 2.8 2.8 0.6 

See footnotes following table 4. Source: Bureau of Labor Statistics 
16

Footnotes, Tables 1-4 

Source: Output data are from the Bureau of Economic Analysis (BEA), U.S. Department of 

Commerce, and are modified by the Bureau of Labor Statistics (BLS), U.S. Department of Labor. 

Compensation and hours data are from BLS. Capital measures are based on data supplied by BEA and 

the U.S. Department of Agriculture. Also see Summary of Methods in this release. 

(1) The private business sector includes all of gross domestic product except the output of 

general government, government enterprises, non-profit institutions, the rental 

value of owner-occupied real estate, and the output of paid employees of private households. 

The private nonfarm business sector also excludes farms but includes agricultural services. 

(2) Output per unit of combined labor and capital inputs. 

(3) Gross domestic product originating in the sector, superlative chained index. 

(4) Index of hours at work of all persons including employees, proprietors, and unpaid family 

workers, classified by education, work experience, and gender. This superlative chain 

index is computed by combining changes in the hours of each education, experience, 

and gender group weighted by each group’s share of labor compensation. 

(5) A measure of the flow of capital services used in the sector. 

(6) Labor input combined with capital input, using labor's and capital's shares of costs as weights to 

 form a superlative chained index. 
17

Table 5. Compound average annual rates of growth in real capital services by asset type, private 

business sector, 1987-2006 

Percent per year 

1987 

to 

2006 

1987 

to 

1990 

1990 

to 

1995 

1995 

to 

2000 

2000 

to 

2006 

2005 

to 

2006 

All Assets 

3.8 3.6 3.2 5.7 2.9 2.7 

 Equipment 5.9 4.6 4.8 9.4 4.7 4.7 

 All Information Processing 

Equipment &Software (IPES) 11.2 10.8 9.4 17.1 8.3 7.1 

 Computers & related 

equipment 23.1 18.8 16.4 40.9 17.3 16.8 

 Software 12.9 17.7 13.3 16.5 7.3 5.7 

 Communication equipment 7.4 6.3 5.4 10.8 6.7 5.1 

 Other IPES 3.5 3.4 3.8 3.2 3.5 4.9 

 All other equipment 2.4 1.2 1.8 4.2 1.9 2.7 

 Structures 1.8 2.8 1.9 2.0 1.1 0.9 

 Residential rental capital 1.5 2.0 1.1 1.7 1.5 1.3 

 Inventories 2.6 2.6 2.2 4.3 1.5 2.3 

 Land 1.4 2.9 1.4 1.7 0.5 -0.4 

Source: Bureau of Labor Statistics 

Note: For a brief discussion of methods used in preparing these data, see Summary of Methods in this release. 
18

Table 6. Compound average annual rates of growth in real capital services by asset type, private 

nonfarm business sector, 1987-2006 

Percent per year 

1987 

to 

2006 

1987 

to 

1990 

1990 

to 

1995 

1995 

to 

2000 

2000 

to 

2006 

2005 

to 

2006 

All Assets 

3.9 3.6 3.3 5.9 2.9 2.8 

 Equipment 6.1 4.9 5.0 9.5 4.8 4.7 

 All Information Processing 

Equipment &Software (IPES) 11.2 10.8 9.3 17.1 8.3 7.1 

 Computers & related 

equipment 23.1 18.8 16.3 40.9 17.3 16.8 

 Software 12.9 17.7 13.2 16.6 7.3 5.7 

 Communication equipment 7.4 6.3 5.4 10.8 6.7 5.1 

 Other IPES 3.5 3.4 3.8 3.2 3.5 4.9 

 All other equipment 2.5 1.5 2.0 4.2 1.9 2.7 

 Structures 1.9 2.9 2.0 2.1 1.1 1.0 

 Residential rental capital 1.5 2.0 1.1 1.7 1.5 1.3 

 Inventories 2.7 3.0 2.3 4.5 1.6 2.4 

 Land 1.4 1.8 1.5 2.1 0.6 0.5 

Source: Bureau of Labor Statistics 

Note: For a brief discussion of methods used in preparing these data, see Summary of Methods in this release.