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Internet address: http://www.bls.gov/mfp USDL 05-114
Historical, technical Tuesday, February 1, 2005
information: (202) 691-5606 For Release: 10:00 AM EST
Media contact: (202) 691-5902
MULTIFACTOR PRODUCTIVITY TRENDS, 2002
Private Business and Private Nonfarm Business
From 2001 to 2002, multifactor productivity increased 1.9 percent in the
private business sector and 2.0 percent in the private nonfarm business sector,
the Bureau of Labor Statistics of the U.S. Department of Labor reported today.
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 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.
Multifactor productivity in the private business and nonfarm business sectors
showed the fastest rate of growth since 1992. The 2002 annual changes are
summarized in table A, and further detail and historical measures are shown in
tables 1 through 6.
This is the last release of private business and nonfarm business productivity
measures based on the Standard Industrial Classification (SIC) system.
SIC-based multifactor productivity and related series through 2002 will remain
available, but will no longer be updated. In the future, historical and new
measures will be based on the North American Industrial Classification System
(NAICS).
Chart 1 shows the annual indexes of multifactor productivity, output per hour
worked, and output per unit of capital services for the 1948-2002 period for
private business. Over the last 55 years, capital services have grown more
rapidly than hours in the private business sector, 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 workers with
more human capital have supplemented multifactor productivity growth, usually
allowing output per hour to grow at a faster rate than multifactor
productivity.
Private business and private nonfarm business
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, but
the output of government enterprises is omitted.
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.
Changes in 2001-2002
Private business sector
Multifactor productivity rose 1.9 percent in 2002, the largest rate of increase
since 1992. The multifactor productivity gain in 2002 reflected a 1.9 percent
increase in output while the combined inputs of capital and labor remained
unchanged. In comparison, in 2001, multifactor productivity increased by 0.1
percent as both output and combined inputs increased by 0.4 percent.
In 2002, growth in capital services slowed to 2.7 percent, down from the 4.2
percent increase in 2001. The 1.3 percent drop in labor input in 2002 is about
unchanged from the decline of 1.4 percent in 2001. It is the second straight
year of declining labor input. The capital-labor ratio (capital services per
hour of all persons) typically grows rapidly when hours fall. In 2002, the
capital-labor ratio grew more rapidly than any other year since 1982, at an
annual rate of 5.3 percent. The exception is 2001, when the capital-labor
ratio grew at an annual rate of 6.6 percent.
Among the broad categories of capital assets, equipment grew more rapidly than
other assets (see table 5). Within equipment, information processing equipment
and software continued to increase sharply in 2002. However, these rates are
markedly slower than in the 1995-2000 period. The largest increase in
equipment growth continues to be in computers and related equipment, 21.3
percent. Structures and land continued to grow in 2002 at rates similar to
recent years. Inventories, however, declined in 2002.
Labor input reflects the change in hours at work, adjusted for the effects of
changing labor composition. Hours fell 2.5 percent in 2002, the second
consecutive year that hours declined. Employment declined 2.2 percent in 2002
after dipping 0.8 percent in 2001. The work week declined slightly for the
third year in a row. Changes in labor composition, as measured by shifts in
the educational attainment and work experience of the work force, jumped 1.2
percent in 2002 (see �Changes in the Composition of Labor for the BLS
Multifactor Productivity Measures, 2002�, available at
http://www.bls.gov/mfp/mprlab02.pdf) . This was the largest increase since
1992. Labor input fell because the decline in both employment and the work
week exceeded the sharp increase in labor composition.
Table A. Productivity and related data, percent changes 2001-02
Private Private
Business1 Nonfarm
Business1
Productivity
Multifactor Productivity2 1.9 2.0
Output per hour of all persons 4.5 4.5
Output per unit of capital services -0.8 -0.9
Output 1.9 1.8
Inputs
Labor input3 -1.3 -1.5
Hours -2.5 -2.5
Labor Composition4 1.2 1.1
Capital services 2.7 2.8
Combined units of labor and capital inputs5 0.0 -0.1
Analytic ratio:
Capital services per hour of all persons 5.3 5.5
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 productivity (output per hour worked) increased 4.5 percent in 2002.
This was the largest increase since 1964 and included a 2.5 percent decline in
hours at work. Capital productivity (output per unit of capital services)
fell 0.8 percent, the smallest decline since 1999.
Private nonfarm business
Multifactor productivity in the private nonfarm business sector rose 2.0
percent in 2002, the largest rate of growth since 1992. Output
increased 1.8 percent, and the growth of combined units of capital and labor
inputs declined 0.1 percent. In comparison, in 2001, multifactor productivity
showed no growth as output and combined inputs both rose 0.5 percent.
Labor input declined 1.5 percent in 2002, the second consecutive drop. As in
the private business sector, the slow growth of labor input was due to a
decline in hours at work that was partially offset by a strong positive
contribution from labor composition (see table A). Capital services increased
2.8 percent, growth slowed for the fourth consecutive year. The fastest
growing component of capital services was equipment. The 4.9 percent growth
rate, however, was the slowest since 1993. Capital services of information
processing equipment and software rose by 10.0 percent in 2002, also the
slowest rate of growth since 1993. As in previous years, the fastest increase
was in computers and related equipment with a growth rate of 21.3 percent.
Labor productivity grew 4.5 percent in 2002, and capital productivity dipped
0.9 percent. The decline in capital productivity was the smallest since 1999.
In 2002, capital services per hour increased at the historically rapid rate of
5.5 percent.
Long-term trends in private business and private nonfarm business
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 or of 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 contrast, multifactor productivity treats capital as
an explicit factor of production and, therefore, is net of changes in capital
intensity. 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. T
herefore, multifactor productivity accounts for changes in labor composition as
well. Long-term 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
(see table B).
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.
Private Business and Nonfarm Business Sectors
The trends of the various measures in the private nonfarm business sector were
similar to those in the private business sector in each period. Therefore, the
patterns of productivity slowdowns after 1973 and rebounds after 1995
correspond closely in the two sectors. The description that follows focuses
exclusively on the private business sector.
Over the entire 1948-2002 period, output per hour worked grew at an annual rate
of 2.5 percent in private business (see table B). Of the 2.5 percent growth
rate in labor productivity, 1.4 percent can be attributed to increases in
multifactor productivity, 0.9 percent to the contribution of capital intensity,
and 0.2 percent to changes in labor composition. The contribution of capital
intensity is composed of the contribution of information processing equipment
and software (0.3 percent) and of the contribution of all other types of
capital (0.5 percent). Information processing equipment and software includes
computers and related equipment, communications equipment, instruments and
photocopying equipment, and software. Investment in these forms of capital
was small prior to 1973 but since then has increased its share in total
investment.
During the 1948-73 period, labor productivity, or output per hour worked, in
private business grew 3.3 percent per year, faster than the average rate for
the entire 1948-2002 period. This reflected strong growth in multifactor
productivity (2.1 percent), combined with average contributions of capital
intensity (0.9 percent) and labor composition (0.2 percent).
After 1973, productivity growth slowed (see table B). From 1973 to 1990, labor
productivity increased at an annual average rate of 1.5 percent, much slower
than the growth rate of 3.3 percent during the previous period. Gains in
multifactor productivity dropped to only 0.5 percent, much lower than the 2.1
percent rate during the 1948-73 period. The contribution of capital intensity
remained nearly stable at 0.8 percent in the 1973-90 period, as information
processing equipment and software began to play an increasingly important role.
As a result, labor productivity growth from 1973-90 was nearly half that of the
1948-73 period, reflecting the much slower growth in multifactor productivity.
From 1990 to 1995, labor productivity advanced at an annual rate of 1.5
percent, the same rate as during the 1973-90 period. Small increases in the
rates of growth in multifactor productivity and in the contribution of labor
composition were offset by a decline in the contribution of capital intensity,
from 0.8 percent in 1973-90 to 0.4 percent in 1990-95. Information processing
capital continued growing in importance, contributing all the increase in
capital intensity in the latter period.
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, 1948 to 2002
(percent per year)
1948 1948 1973 1990 1995 2000 2001
-02 -73 -90 -95 -00 -02 -02
Private business1
Output per hour
of all persons 2.5 3.3 1.5 1.5 2.7 3.6 4.5
Contribution of
capital intensity2 0.9 0.9 0.8 0.4 1.1 1.8 1.7
Contribution of
information processing
equipment and software3 0.3 0.1 0.4 0.4 0.9 0.9 0.8
Contribution of all
other capital services 0.5 0.8 0.3 0.0 0.2 0.9 0.8
Contribution of
labor composition4 0.2 0.2 0.2 0.4 0.3 0.7 0.8
Multifactor productivity5 1.4 2.1 0.5 0.7 1.3 1.0 1.9
Private nonfarm business1
Output per hour
of all persons 2.3 2.9 1.4 1.6 2.5 3.6 4.5
Contribution of
capital intensity2 0.9 0.8 0.8 0.5 1.1 1.8 1.7
Contribution of
information processing
equipment and software3 0.3 0.1 0.4 0.4 0.9 0.9 0.8
Contribution of all
other capital services 0.5 0.7 0.4 0.0 0.2 0.9 0.9
Contribution of
labor composition4 0.2 0.2 0.2 0.4 0.3 0.7 0.8
Multifactor productivity5 1.2 1.9 0.4 0.7 1.1 1.0 2.0
Contribution of R&D to
multifactor productivity 0.2 0.2 0.2 0.2 0.2 0.3 0.3
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.
From 1995 to 2000, output per hour worked rebounded to a 2.7 percent growth rate
per year, 1.2 percentage points more than during the 1990-95 period. Half of
this acceleration can be attributed to faster multifactor productivity growth,
which almost doubled from 0.7 percent to 1.3 percent per year. The remainder
of the increase was due to a rise in the contribution of capital intensity,
from 0.4 percent to 1.1 percent with information processing capital accounting
for a predominant part of this increase. This continued the trend in the
substitution of information processing equipment and software for other forms
of capital seen in earlier periods.
From 2000 to 2002, output per hour worked rose rapidly at an annual rate of
3.6 percent. The contribution of capital intensity accounted for most of this
faster growth, although labor composition added to output per hour growth.
Capital intensity grew 1.8 percent, up from the 1.1 percent rate during the
1995-2000 period. Information processing equipment and software contributed
about half of the growth of capital services. All other capital services
contributed the other half, posting a substantial increase from 0.2 percent in
1995-2000 to 0.9 percent in 2000-02. The contribution of labor composition
increased from 0.3 percent in 1995-2000 to 0.7 percent in 2000-02.
Only multifactor productivity reduced its contribution to output per hour
worked, slowing from an annual growth rate of 1.3 percent in 1995-2000 to an
annual growth rate of 1.0 percent in 2000-02.
Contribution of research and development to multifactor productivity in private
nonfarm business
While multifactor productivity reflects many influences, technological change
is one of the primary contributors. For private nonfarm business, 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 1948-2002 period, or about 17 percent of total
multifactor productivity growth (see table B). The contribution of research and
development varied little over time, contributing 0.2 percent per year during
the 1948-73 period, 0.2 percent during the 1973-90 period, 0.2 percent for the
1990-95 and 1995-2000 periods, and 0.3 percent in the 2000-02 period.
Revisions
Private business and private nonfarm business output series reflect the annual
revisions to the National Income and Product Accounts (NIPA), announced by the
Bureau of Economic Analysis (BEA) in October 2004.
Hours at work measures for production and nonsupervisory workers in
nonagricultural establishments were revised to reflect new measures of hours
at work to hours paid ratios. Average weekly paid hours prior to 2001 were
adjusted to hours at work using the ratio of hours at work to hours paid
derived from the Hours at Work Survey. After the discontinuation of the Hours
at Work Survey following the collection of data for 2000, new ratios of hours
at work to hours paid based on data collected from the National Compensation
Survey (NCS) now extend the series beyond 2000. A description of the hours at
work to hours paid ratio derived from the National Compensation Survey titled
�A Note on the Incorporation of Hours-Worked Hours-Paid Ratios from the
Employment Index into Hours at Work Measures� can be found at
http://www.bls.gov/lpc/lprhws/lprhwhp.pdf.
New estimates of average weekly hours at work for nonproduction and supervisory
workers developed using information from the Current Population Survey (CPS)
together with information from the Current Employment Statistics (CES) program,
and the NCS have been incorporated. A description of the methodology used in
calculating these average weekly hours titled �Construction of Average Weekly
Hours for Supervisory and Nonproduction Wage and Salary Workers in Private
Nonfarm Establishments� can be located at
http://www.bls.gov/lpc/lprswawhtech.pdf.
Labor composition measures have been updated through 2002. A brief description,
�Changes in the Composition of Labor for the BLS Multifactor Productivity
Measures, 2002� is available at http://www.bls.gov/mfp/mprlab02.pdf.
Comprehensive tables containing additional data beyond the scope of this press
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." Additional
data not contained in the release can be obtained in print or at
http://www.bls.gov/mfp.
This release presents data for the private business and private nonfarm
business sectors. The private business sector, which accounted for
approximately 78 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
includes them.
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
1948 to 2002, BEA supplies the output indexes. BLS adjusts these to eliminate
the output of government enterprises.
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, video
displays, and other related equipment. Software is comprised of pre-packaged,
custom, and own-account software. Communications equipment is not further
differentiated. Other IPES includes scientific and related equipment,
photocopying and related equipment, and office and accounting equipment.
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 53 SIC industries 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 are obtained from BEA. Current-dollar gross
product originating (GPO) data, obtained from BEA, are used in estimating
capital rental prices.
Labor input in private business and private nonfarm business is obtained by
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. The hours at work of proprietors, unpaid
family workers, and farm employees are derived from the Current Population
Survey. Hours at work for nonproduction and supervisory workers are derived
using data from the CPS, the CES, and the NCS. 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."
The labor and capital components of the input indexes are combined with
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 indirect business taxes. Most indirect taxes, 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.
GPO data by SIC industry are not available for 2002. These data are needed to
calculate rental prices for each asset in every industry. Rental prices for
2001 are used to calculate 2002 capital income shares for each asset. In
addition, while aggregate hours are available for 2002 and used in the
measurement of labor input by major sector, hours at work are unavailable by
SIC industry for 2002. These data are needed to apportion proprietor�s income
into capital and labor costs so that aggregate capital and labor shares can be
calculated. Proprietor�s compensation for 2002 is extrapolated by assuming
that the growth in proprietor�s compensation is the same as the growth in
employee�s compensation per hour.
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 1953-2002 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."
Table 1. Private business sector: Productivity and related measures, 1948-2002
Indexes 2000=100
Output Combined
per Output Multi- units of
hour per factor Capital capital Capital
of all unit of Product- Labor Serv- and per hour of
Year persons capital ivity2 Output3 Input4 ices5 labor6 all persons
1948 27.8 110.9 48.7 15.2 45.9 13.7 31.2 25.1
1949 28.8 107.7 49.3 15.2 44.4 14.1 30.8 26.7
1950 31.3 114.5 52.9 16.7 45.2 14.6 31.6 27.4
1955 36.6 117.9 58.5 20.3 48.2 17.3 34.8 31.0
1960 40.8 113.6 61.6 22.5 48.5 19.8 36.5 35.9
1965 50.0 125.1 72.1 29.1 52.1 23.3 40.4 40.0
1966 52.1 126.5 74.3 31.1 53.5 24.6 41.8 41.2
1967 53.2 121.8 74.5 31.7 53.4 26.0 42.5 43.7
1968 54.9 122.7 76.4 33.3 54.2 27.1 43.6 44.8
1969 55.2 120.8 76.1 34.3 55.8 28.4 45.1 45.7
1970 56.4 115.6 76.0 34.3 54.8 29.7 45.1 48.8
1971 58.9 115.4 78.4 35.6 54.4 30.9 45.4 51.0
1972 60.7 118.3 80.6 37.9 56.2 32.1 47.0 51.3
1973 62.7 119.9 82.9 40.6 58.2 33.9 49.0 52.3
1974 61.7 112.3 80.0 40.0 58.6 35.6 50.0 55.0
1975 63.9 107.5 80.8 39.6 56.0 36.9 49.0 59.5
1976 66.1 111.3 83.8 42.3 57.7 38.0 50.4 59.4
1977 67.2 113.4 85.2 44.6 60.0 39.4 52.4 59.2
1978 67.9 115.6 86.3 47.4 63.1 41.1 55.0 58.8
1979 67.9 113.5 86.0 49.0 65.0 43.2 57.0 59.9
1980 67.8 106.6 84.1 48.5 64.6 45.5 57.7 63.6
1981 69.2 104.4 84.3 49.8 65.6 47.8 59.1 66.3
1982 68.8 97.2 81.5 48.4 64.7 49.8 59.4 70.7
1983 71.2 99.5 83.8 51.0 66.1 51.2 60.8 71.6
1984 73.2 103.2 86.4 55.5 70.1 53.8 64.3 71.0
1985 74.9 102.9 87.5 58.1 71.8 56.5 66.4 72.8
1986 77.3 102.4 88.9 60.3 72.7 58.9 67.9 75.5
1987 77.7 102.4 89.1 62.5 75.0 61.0 70.1 75.9
1988 78.9 103.4 89.8 65.2 77.7 63.0 72.6 76.3
1989 79.7 103.9 90.3 67.6 80.2 65.0 74.9 76.7
1990 81.4 102.6 90.9 68.6 80.1 66.9 75.5 79.3
1991 82.7 99.7 90.3 68.1 79.1 68.4 75.4 83.0
1992 86.2 101.7 92.7 70.9 80.0 69.7 76.5 84.8
1993 86.5 102.6 93.1 73.2 82.4 71.3 78.6 84.4
1994 87.5 104.5 94.1 76.9 86.1 73.5 81.7 83.7
1995 87.7 103.6 93.8 79.1 88.5 76.4 84.3 84.6
1996 90.3 103.9 95.5 82.8 90.4 79.7 86.7 86.9
1997 91.9 104.1 96.3 87.2 94.0 83.8 90.5 88.3
1998 94.4 102.6 97.4 91.5 96.2 89.2 93.9 92.0
1999 97.2 101.8 98.7 96.2 99.0 94.5 97.5 95.4
2000 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
2001 102.7 96.3 100.1 100.4 98.6 104.2 100.4 106.6
2002 107.2 95.5 102.0 102.3 97.4 107.1 100.3 112.2
See footnotes following table 4.
Source: Bureau of Labor Statistics
Table 2. Private nonfarm business sector: Productivity and related measures,
1948-2002
Indexes 2000=100
Output Combined
per Output Multi- units of
hour per factor Capital capital Capital
of all unit of Product- Labor Serv- and per hour of
Year persons capital ivity2 Output3 Input4 ices5 labor6 all persons
1948 31.5 124.1 53.7 14.7 39.6 11.8 27.3 25.4
1949 32.9 120.5 54.8 14.7 38.0 12.2 26.8 27.3
1950 35.1 127.4 58.1 16.1 39.3 12.7 27.8 27.5
1955 40.0 131.7 63.2 20.0 43.7 15.2 31.6 30.4
1960 43.6 126.0 65.8 22.2 45.1 17.7 33.8 34.6
1965 52.5 137.1 75.7 29.0 49.8 21.2 38.3 38.3
1966 54.4 138.5 77.9 31.1 51.4 22.5 39.9 39.3
1967 55.4 132.9 77.9 31.6 51.4 23.8 40.6 41.6
1968 57.1 133.8 79.8 33.3 52.3 24.9 41.7 42.7
1969 57.2 131.1 79.2 34.3 54.0 26.2 43.3 43.6
1970 58.1 124.9 78.8 34.3 53.3 27.5 43.5 46.5
1971 60.6 124.4 81.2 35.6 53.0 28.6 43.8 48.7
1972 62.5 127.2 83.6 38.0 54.8 29.9 45.5 49.1
1973 64.5 129.3 86.0 40.8 56.9 31.6 47.5 49.9
1974 63.6 120.8 83.1 40.2 57.3 33.3 48.4 52.6
1975 65.4 114.3 83.3 39.5 54.7 34.6 47.4 57.2
1976 67.7 118.6 86.5 42.3 56.4 35.7 48.9 57.1
1977 68.7 120.6 87.8 44.7 58.8 37.1 50.9 56.9
1978 69.6 122.9 89.1 47.7 61.9 38.8 53.5 56.6
1979 69.4 120.2 88.5 49.2 63.9 40.9 55.6 57.7
1980 69.2 112.7 86.5 48.7 63.5 43.2 56.3 61.4
1981 70.2 109.2 86.1 49.7 64.5 45.5 57.7 64.3
1982 69.6 101.2 83.0 48.1 63.7 47.6 58.0 68.8
1983 72.8 103.9 86.1 51.3 65.1 49.4 59.6 70.0
1984 74.3 107.2 88.2 55.6 69.1 51.9 63.1 69.3
1985 75.5 106.1 88.7 58.0 71.1 54.7 65.4 71.2
1986 77.9 105.2 90.0 60.3 72.1 57.3 66.9 74.0
1987 78.2 104.7 90.0 62.4 74.5 59.6 69.3 74.7
1988 79.6 105.7 90.9 65.3 77.3 61.8 71.9 75.2
1989 80.1 105.9 91.1 67.6 79.8 63.9 74.3 75.7
1990 81.7 104.2 91.5 68.6 79.8 65.8 75.0 78.4
1991 83.1 101.1 91.0 68.1 78.7 67.4 74.8 82.3
1992 86.5 102.8 93.2 70.8 79.6 68.8 75.9 84.1
1993 86.9 103.8 93.6 73.2 82.2 70.6 78.2 83.7
1994 87.9 105.4 94.5 76.7 85.6 72.8 81.2 83.3
1995 88.4 104.7 94.6 79.3 88.0 75.7 83.8 84.4
1996 90.8 104.7 96.0 82.9 90.0 79.2 86.3 86.7
1997 92.2 104.6 96.6 87.2 93.7 83.3 90.2 88.2
1998 94.7 103.0 97.7 91.5 96.0 88.8 93.7 91.9
1999 97.3 102.1 98.8 96.3 99.0 94.3 97.5 95.3
2000 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
2001 102.6 96.3 100.0 100.5 98.8 104.4 100.5 106.6
2002 107.2 95.4 102.0 102.4 97.3 107.3 100.3 112.4
See footnotes following table 4.
Source: Bureau of Labor Statistics
Table 3. Private business sector: Productivity and related measures, 1949-2002
Percent change
Output Combined
per Output Multi- units of
hour per factor Capital capital Capital
of all unit of Product- Labor Serv- and per hour of
Year persons capital ivity2 Output3 Input4 ices5 labor6 all persons
1949 3.5 -2.9 1.2 -0.2 -3.3 2.8 -1.4 6.5
1950 8.8 6.3 7.4 10.1 2.0 3.6 2.5 2.3
1955 4.6 5.0 4.6 8.5 3.9 3.4 3.7 -0.3
1960 1.9 -0.9 0.6 1.9 0.5 2.8 1.2 2.8
1965 3.6 2.3 3.3 7.1 3.2 4.6 3.7 1.2
1966 4.1 1.1 3.1 6.8 2.6 5.6 3.6 2.9
1967 2.3 -3.7 0.2 1.9 -0.2 5.8 1.7 6.2
1968 3.2 0.8 2.5 5.1 1.6 4.2 2.4 2.4
1969 0.5 -1.6 -0.4 3.1 2.9 4.7 3.5 2.1
1970 2.2 -4.3 -0.2 0.0 -1.7 4.5 0.1 6.8
1971 4.4 -0.2 3.2 3.9 -0.8 4.1 0.7 4.6
1972 3.1 2.5 2.9 6.5 3.4 3.9 3.6 0.6
1973 3.2 1.4 2.8 7.1 3.5 5.6 4.2 1.9
1974 -1.5 -6.3 -3.4 -1.5 0.7 5.2 2.0 5.2
1975 3.6 -4.3 1.0 -1.0 -4.4 3.4 -2.0 8.2
1976 3.4 3.5 3.6 6.7 2.9 3.0 2.9 -0.1
1977 1.6 1.9 1.7 5.6 4.0 3.7 3.9 -0.3
1978 1.2 1.9 1.3 6.3 5.2 4.3 4.9 -0.8
1979 0.0 -1.8 -0.4 3.4 3.0 5.3 3.7 1.9
1980 -0.2 -6.0 -2.3 -1.2 -0.6 5.2 1.1 6.2
1981 2.1 -2.1 0.3 2.8 1.5 5.1 2.6 4.3
1982 -0.6 -6.8 -3.3 -2.9 -1.4 4.2 0.4 6.7
1983 3.6 2.4 2.9 5.4 2.2 2.9 2.4 1.2
1984 2.8 3.6 3.0 8.8 6.0 5.0 5.7 -0.8
1985 2.3 -0.3 1.3 4.7 2.6 5.0 3.3 2.6
1986 3.1 -0.5 1.6 3.8 1.2 4.3 2.2 3.6
1987 0.6 0.0 0.2 3.6 3.2 3.6 3.3 0.6
1988 1.6 1.0 0.9 4.4 3.6 3.3 3.5 0.5
1989 0.9 0.4 0.5 3.7 3.1 3.2 3.2 0.5
1990 2.1 -1.3 0.6 1.5 0.0 2.9 0.9 3.4
1991 1.7 -2.8 -0.6 -0.7 -1.2 2.2 -0.2 4.6
1992 4.2 2.0 2.6 4.1 1.1 2.0 1.4 2.1
1993 0.4 0.9 0.4 3.2 3.0 2.3 2.8 -0.5
1994 1.1 1.9 1.0 5.0 4.4 3.1 4.0 -0.7
1995 0.2 -0.9 -0.2 3.0 2.8 3.9 3.2 1.1
1996 2.9 0.3 1.7 4.7 2.1 4.4 2.9 2.7
1997 1.8 0.2 0.9 5.3 4.0 5.1 4.4 1.6
1998 2.7 -1.4 1.1 4.9 2.4 6.4 3.7 4.2
1999 2.9 -0.8 1.3 5.2 2.9 6.0 3.9 3.7
2000 2.9 -1.8 1.4 3.9 1.0 5.8 2.5 4.8
2001 2.7 -3.7 0.1 0.4 -1.4 4.2 0.4 6.6
2002 4.5 -0.8 1.9 1.9 -1.3 2.7 0.0 5.3
See footnotes following table 4.
Source: Bureau of Labor Statistics
Table 4. Private nonfarm business sector: Productivity and related measures,
1949-2002
Percent change
Output Combined
per Output Multi- units of
hour per factor Capital capital Capital
of all unit of Product- Labor Serv- and per hour of
Year persons capital ivity2 Output3 Input4 ices5 labor6 all persons
1949 4.5 -2.9 1.9 0.0 -4.2 2.9 -2.0 7.6
1950 6.7 5.7 6.1 10.0 3.6 4.1 3.7 0.9
1955 4.7 5.0 4.6 8.9 4.2 3.7 4.1 -0.3
1960 1.3 -1.4 0.5 1.7 0.4 3.1 1.2 2.7
1965 3.1 2.0 2.8 7.1 3.7 5.0 4.1 1.1
1966 3.5 1.0 2.8 7.1 3.3 6.1 4.2 2.4
1967 1.8 -4.0 0.0 1.7 -0.2 5.9 1.7 6.1
1968 3.1 0.7 2.6 5.3 1.8 4.6 2.7 2.5
1969 0.2 -2.0 -0.8 3.0 3.3 5.2 3.9 2.2
1970 1.6 -4.8 -0.6 -0.1 -1.3 4.9 0.5 6.7
1971 4.2 -0.3 3.1 3.8 -0.7 4.2 0.7 4.6
1972 3.2 2.2 2.9 6.8 3.4 4.5 3.7 0.9
1973 3.2 1.6 2.9 7.4 3.9 5.7 4.4 1.6
1974 -1.4 -6.6 -3.4 -1.4 0.6 5.5 2.0 5.5
1975 2.8 -5.4 0.3 -1.7 -4.4 3.9 -2.0 8.6
1976 3.5 3.8 3.8 7.1 3.1 3.2 3.1 -0.2
1977 1.5 1.7 1.5 5.7 4.2 3.9 4.1 -0.2
1978 1.3 1.9 1.5 6.6 5.2 4.6 5.0 -0.5
1979 -0.3 -2.2 -0.7 3.2 3.2 5.5 3.9 1.9
1980 -0.2 -6.2 -2.3 -1.1 -0.5 5.5 1.2 6.4
1981 1.4 -3.1 -0.5 2.2 1.5 5.4 2.6 4.7
1982 -0.9 -7.4 -3.6 -3.1 -1.3 4.6 0.5 7.0
1983 4.6 2.7 3.7 6.6 2.3 3.8 2.7 1.8
1984 2.1 3.2 2.4 8.3 6.2 5.0 5.8 -1.0
1985 1.6 -1.0 0.6 4.3 2.9 5.4 3.7 2.7
1986 3.1 -0.8 1.5 3.9 1.3 4.8 2.4 4.0
1987 0.5 -0.5 0.0 3.6 3.3 4.1 3.6 1.0
1988 1.7 1.0 0.9 4.6 3.7 3.6 3.7 0.7
1989 0.7 0.1 0.2 3.5 3.2 3.4 3.3 0.6
1990 2.0 -1.6 0.5 1.5 0.0 3.1 1.0 3.6
1991 1.8 -3.0 -0.5 -0.8 -1.4 2.3 -0.3 5.0
1992 4.0 1.7 2.4 3.9 1.2 2.1 1.5 2.2
1993 0.5 0.9 0.4 3.5 3.3 2.5 3.0 -0.5
1994 1.1 1.6 0.9 4.8 4.1 3.2 3.8 -0.4
1995 0.6 -0.7 0.1 3.3 2.8 4.0 3.2 1.3
1996 2.7 0.0 1.5 4.5 2.2 4.5 3.0 2.7
1997 1.6 -0.1 0.7 5.2 4.1 5.3 4.5 1.7
1998 2.7 -1.5 1.1 5.0 2.5 6.6 3.8 4.2
1999 2.8 -0.9 1.1 5.2 3.1 6.2 4.1 3.7
2000 2.8 -2.1 1.2 3.8 1.1 6.0 2.6 4.9
2001 2.6 -3.7 0.0 0.5 -1.2 4.4 0.5 6.6
2002 4.5 -0.9 2.0 1.8 -1.5 2.8 -0.1 5.5
See footnotes following table 4.
Source: Bureau of Labor Statistics
Footnotes, Tables 1-4
Source: Output data are from the Bureau of Economic Analysis (BEA),
U.S. Department of Commerce, and 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. See also 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 the 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.
Table 5. Real capital input by asset type, private business, 1948-2002
Average annual growth rates (percent)
1948- 1948- 1973- 1990- 1995- 2000- 2001-
2002 1973 1990 1995 2000 2002 2002
All Assets 3.9 3.7 4.1 2.7 5.5 3.5 2.7
Equipment 6.0 5.4 6.3 4.4 9.5 6.2 4.9
All Information 11.8 8.9 15.1 9.4 18.1 12.1 10.0
equipment & software
Computers & 25.6 14.4 41.9 16.6 42.6 24.8 21.3
related equipment
Software 17.9 19.9 17.0 14.8 17.3 8.9 6.1
Communications 8.5 9.1 8.1 4.9 9.8 10.1 8.4
equipment
Other IPES 6.4 6.8 8.1 3.2 3.9 3.3 3.5
All other equipment 3.7 4.8 2.9 1.2 4.0 1.8 0.8
Structures 3.0 3.2 3.5 1.8 2.1 1.7 1.5
Residential rental 2.2 2.8 2.1 0.9 1.5 1.4 1.3
capital
Inventories 3.4 4.2 2.6 2.6 4.8 -1.7 -3.5
Land 1.6 1.8 1.7 0.3 1.2 0.9 1.1
Source: Bureau of Labor Statistics
Note: For a brief discussion of methods used in preparing these data,
see Summary of Methods in this release.
Table 6. Real capital input by asset type, private nonfarm business, 1948-2002
Average annual growth rates (percent)
1948- 1948- 1973- 1990- 1995- 2000- 2001-
2002 1973 1990 1995 2000 2002 2002
All Assets 4.2 4.0 4.4 2.8 5.7 3.6 2.8
Equipment 6.1 5.5 6.6 4.6 9.7 6.2 4.9
All Information 11.8 8.9 15.1 9.4 18.1 12.1 10.0
equipment & software
Computers & 25.6 14.4 41.9 16.5 42.6 24.8 21.3
related equipment
Software 17.9 19.9 17.0 14.8 17.3 8.9 6.1
Communications 8.5 9.1 8.1 4.9 9.8 10.1 8.4
equipment
Other IPES 6.4 6.8 8.1 3.2 3.9 3.3 3.5
All other equipment 3.8 4.9 3.1 1.4 4.1 1.8 0.8
Structures 3.1 3.3 3.5 1.9 2.2 1.7 1.5
Residential rental 2.2 2.8 2.1 0.9 1.5 1.4 1.3
capital
Inventories 3.6 4.5 2.8 2.6 4.9 -1.7 -3.6
Land 2.4 2.8 2.7 0.4 1.4 1.1 1.4
Source: Bureau of Labor Statistics
Note: For a brief discussion of methods used in preparing these data,
see Summary of Methods in this release.