2016 Multifactor Productivity Trends in Manufacturing — 2018-05-16

Manufacturing sector multifactor productivity declined 3.2 percent in 2016, the U.S. Bureau of Labor Statistics reported today.(See chart 1, table A.) This was the largest annual decline in manufacturing multifactor productivity since the series started in 1987. (See table 1.) The multifactor productivity decline in 2016 reflected a 0.4-percent increase in sectoral output and a 3.6-percent increase in combined inputs. The decrease in multifactor productivity followed a 1.5-percent decrease in 2015. Multifactor productivity is calculated by dividing an index of real sectoral output by an index of combined units of labor input, capital services, and intermediate inputs. Multifactor productivity annual measures differ from BLS quarterly labor productivity or output per hour measures because the former also includes information on capital services, shifts in the composition of the workforce, and intermediate inputs. Durable manufacturing sector multifactor productivity decreased 2.2 percent in 2016. The decline reflected a 1.2-percent decrease in sectoral output and a 1.0-percent increase in combined inputs.