2007 Multifactor Productivity Trends in Manufacturing — 2010-02-25

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.