2023 Total Factor Productivity — 2024-03-21

Total factor productivity (TFP) in the private nonfarm business sector increased 0.7 percent in 2023, the U.S. Bureau of Labor Statistics reported today. (See table A.) The 2023 increase in TFP reflects a 2.6-percent increase in output and a 1.9-percent increase in the combined inputs of capital and labor. Capital input grew by 2.8 percent and labor input�which is the combined effect of hours worked and labor composition�increased by 1.2 percent. The 2023 growth in TFP is in close range with the average annual growth experienced in the pre-pandemic 2011-19 period. Private business sector total factor productivity also increased 0.7 percent in 2023, as output increased 2.6 percent and combined inputs increased 1.9 percent. (See table A.) The 0.7-percent growth in TFP in the private nonfarm business sector in 2023 resulted from the growth in output outpacing the growth in combined inputs. The growth of these three measures shows a similar pattern to growth experienced in 2019.