MULTI FACTOR PRODUCTIVITY MEASURES. Private Business, Private Nonfarm Business, and Manufacturing Sectors Annual Measures for 1984

Transcription

1 Bureau of Labor Statistics Hi storical, technical informatio~: (202) Current.data: (202) or 1208 Media contact: (202) United States Department of Labor Washington, D.C USDL For Release: 10:00 AM EDT Thursday, October 3, 1985 MULT FACTOR PRODUCTVTY MEASURES Private Business, Private Nonfarm Business, and Manufacturing Sectors Annual Measures for 1984 Multifactor productivity--output per unit of combined labor and capital inputs--grew 4.1 percent in 1984 in private business, the Bureau of Labor Statistics of the U.S. Department of Labor reported today (table A). This is the largest increase in multifactor productivity since 1950 when it increased 7.2 percent. Changes in mul tifactor productivity measure the difference between the growth in ouput (the amount of goods and services produced) and the growth in labor and capital engaged in that production. As such,. it reflects the effect of such factors as new technology, economies of scale, changes in the composition of the workforce and type of capital, labor management relations, and research ~nd de~elopment. The annual rates of change of multifactor productivity for the three major sectors covered by the BLS measures from 1983 to 1984 are: Details are given in tables 1-6. Private business sector 4.1 percent for private business, 3.6 percent for private nonfarm business, and 5.2 percent for manufacturing. Multifactor productivity increased 4.1 percent in private business from 1983 to 1984 (table 4), compared with an increase of 2.9 percent from 1982 to This rise, the largest since 1950, reflected an increase in output of 8.9 percent and an increase in combined labor and capital inputs of 4.7 percent. The increase in combined inputs resulted from increases in both hours of all persons (5.5 percent) and capital services (3.3 percent). All five of the principle components of capital services (equipment, structures, rental residential, inventories, and land) increased over the year. O~tput per hour of all persons increased 3.3 percent from 1983 to 1984.

2 -2- Table A. indexes and related measures Percent change from 1983 to 1984 tem Pri vate busj ness1 Private nonfarm busi ness1 Manu..- facturing P roducti vity: Output per hour of all persons Output per unit of capital services Multifactor produgtivity2 Output: nputs: Hours of all persons Capital services Combined units of labor and capital input3 Capital services per hour of all persons (capital-labor ratio) Contribution of capital services per hour to output per hour4 3.3? $ Excludes government enterprises. 2 Output per unit of combined labor and capital input. 3 Hours of all persons combined with capital service input index, weighted by labor and capital shares. 4 Percent change in capital services per hour weighted by capital's share of current dollar output.

3 -3- Output per unit of capital services (capital productivity) increased 5.5 percent for 1984, which also was the largest rise since Capital services per hour--the rate of substitution of capital for labor--decreased 2.1 percent from 1983 to 1984; this was the largest decrease in this series. Private nonfarm business Multifactor productivity rose 3.6 percent in the private nonfarm business sector in 1984 (table 5). Output increased 8.7 percent and combin e din put"s i nc rea sed 4. 9 per c en t The r i s e i n combin e din put s was a result of increases in hours of 5.8 percent and capital services of 3.4 percent. This was the largest growth in capital services since 1981 (4.3 percent) in private nonfarm business. This increase also was reflected in all five of the components of capital in Output p~r hou~ of all persons increased 2.8 percent in private nonfarm business from 1983 to The ratio of capital services per hour decreased 2.2 percent, the greatest decline since 1959 when the decline was 2.3 percent. Output per unit of capital services (capital productivity) rose 5.1 percent in 1984, as compared with a 3.7 percent intrease in Manufacturing n manufacturing, multifactor productivity increased 5.2 percent from 1983 to 1984, the largest rise since 1976 when it increased 5.3 percent (table 6). The rise in multifactor productivity reflected an increase of 10.5 percent in nutput and an increase in combined inputs of 5.0 per.cent. The rise in combined inputs resulted from an increase in hours of all persons of 6.7 percent and an increase in cap i.tal s e r v ice s 0 f O. 8 per c e nt The i nc rea S e i n cap ita 1 s e r v ice sin manufacturing was the result of increases in equipment and land and decreases in structures and inventories in Output per hour grew 3.5 percent in manufacturing. Output per unit of capital services "(capital productivity) increased 9.6 percent in manufacturing in This was the largest increase since 1950, when it grew 10.4 percent. The capital-labor ratio fell 5.5 percent, equaling the largest previous decline which occured in Long-term trends measures vary from year to year in part because of changes in the economy related to the business cycle. n order to get an approximate measure of secular trends, long-term measures are calculated. and for Previously, The BLS published end points of measures for the period these time periods approximate common stages in the business cycle. With the addition of 1984 measures, a third period has been added to show the results from 1981 forward.

4 -4- Table B. Compound annual rates of growth in output per hour of all persons, the contribution of capital services per hour, and multifactor productivity, by major sector, 1948 to 1984 Measu re Private business 1 - Output per hour pf all persons Contribution of capital services per hour to output per hour Multifactor 'productfvity Private nonfarm business 1 Output per hour of all persons Contribution of capital servic~s per hour to output per hour Multifactor productivity Manufacturing 1 Output per hour of all persons Contribution of capital servic~s per hour to output per hour Multifactor productivity Excludes government enterprises. 2 Change in capital services per hour weighted by capital's share of current doll ar output. 3 Output per unit of combined labor and capital inputs. Source: Tables 1-3.

5 -5- n the private business and nonfarm business sectors, the growth rate in output per hour for the period had almost returned to the trend rate of growth (table B). n manufacturing, the ' rate exceeded the historical rate. ~1ultifactor productivity growth al so has been increasing.faster than the earl ier trend rate. The contribution of capital services per hour to the growth in output per hour was at the lowest rate since Summary of Methods The following note briefly describes the major data sources and the procedures 'used in deriving BLSmultifactor productivity indexes. More detailed information on the methods, limitations, and data sources are in BlS Bulletin 2178, "Trends in Multifactor The multifactor productivity indexes are derived by dividing an output index. by an input index which is a weighted average of the hours of all persons and capital services. The output indexes are -computed from measures of constant dollar gross domestic product, derived from the national income and product accounts developed by the Bureau of Economic Analysis of the u.s. Department of Commerce. The capital input series measures the services derived from the stock of physical assets. The assets comprise fixed business equipment, structures, inventories, and land. Structures include nonresidential structures and residential capital which is rented out by profitmaking firms or persons. Financial assets are excluded as are owner-occupied residential structures. The aggregate capital measures are obtained by weighting each asset type by its respective rental price. The labor and capital components of. the input indexes are combined with weights which represent each component's share of total output. The index uses changing weights where the share in each year is igeraged with the preceding year's value. 'Data are presented for the private business, private nonfarm bus ih e s s, and man u fa c t u r fn g s e c tor s. The p r i vat e bus i ne s sse c tor, which accounts for about 80 percent of the gross national product, includes all activities in the economy with the exception of general gove'rnment, government enterprises, the "rest-of-the-world" sector, own e r - 0c cup i e d h0 u sing, non pro fit ins tit uti 0 n s, and p r i vat e h0 use h old employees. The private nonfarm business sector also excludes agriculture but includes agricultural services. These multifactor productivity measures describe the relationship between output in real terms and the paid labor time and capital services involved in its production. They do not measure the specific contributions of labor, capital, or any other factor of production. Rather, the'y reflect the joint effects of many influences" including c h a n g e sin t e c h n0 log Y; 1eve 1 0 f 0 u t put; u t il i z a t ion 0 f cap a'c i t Y, energy, and materials; the organization of production; managerial skill; and the characteristics and effort of the work force.

6 -6- Table 1. Private business sector: productivity and related measures, / nputs Year Output per Output per t1ultifactor Output Hours of Capi tal Combined units Capital hour of all unit of product ivity all persons services of 1abor and services persons capital y 3/ 4/ 5/ capi tal inputs y per hour ndexes 1977= , See footnotes following table 6. Octobe r 3, 1985 SOURCE: Bureau of Labor Statistics

7 -7- Table 2. Private nonfarm business sector: productivity and related measures, /, nputs Year Output per Output per r1ultifactor Output Hou rs of Capi tal Combined units Capital hour of all unit of productivity all persons services of 1abor and services persons capital 2/ 3/ 4/ Y capital inputs y per hour ndexes 1977= , G ' See footnotes following table 6. Octobe r 3, 1985 SOllRCE: Bureau of Labor Statistics

8 -8- Table 3. rlanufacturing business sector: productivity and related measures, / nputs Year Output per Output per Multi factor Output Hours of Capital Combined units Capital hour of all unit of productivity all persons services of labor and servi ces persons capital 2/ }j 4/ j capi tal inputs y per hour ndexes 1977= , Q , See footnotes followi ng table 6. Octobe r 3, 1985 SOURCE: Bureau of Labor Statistics

9 -9- Table 4. Private business sector: productivity and related measures, Jj nputs Year Output per Output per Multifactor Output Hours of Capital Combined units Capital hour of all unit of productivity all persons services of 1abor and services, persons capital 3/ i/ Y capital inputs J per hour Percent change , i ' See footnotes following table 6. October 3, 1985 SOURCE:Bureau of Labor Statistics

10 -10- Table 5. Private nonfarm business sector: productivity and related measures, nputs Year Output per Output per Multifactor Output Hours of Capi tal Combi ned uni ts Cap ita1 ' hour of all unit of productivity all persons services of 1abor and services persons capi tal 2/ }j 4/ Y capi tal inputs j per hour,- Percent change See footnotes fo11owi ng table 6. October 3, 1985 SOURCE: Bureau of Labor Statistics

11 -11- Table 6. Manufacturing business sector: productivity and related measures, ! nputs Year Output per Output per Multifactor Output Hours of Capital Combined units C apital hour of all unit of productivity all persons services of 1abor and services.persons capi tal y '}j il 51 capital inputs y per hour Percent change See footnotes following table 6. October 3, 1985 SOURCE: Bureau of labor Statistics

12 -12- Footnotes, Tables 1-6 SOURCE: Output data from Bureau of Economic Analysis (BEA), U.S. Department of Commerce, and the Federal Reserve Board. Compensation and hours data from the Bureau of Labor Statistics, U.S. Department of Labor, and BEA. Capital measures are based on data supplied by BEA and U.S. Department of Agriculture. (1) The private business sector includes all of Gross National Product except the rest-of-world sector, the rental value of owneroccupied real estate, the output arising in nonprofit organiza: tions, the output of paid employees of private households, government, and the statistical discrepancy in preparing the national income accounts. The private nonfarm business $ector 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, in constant dollars. (4) Paid hours of all employees, plus the hours of proprietors and unpaid family workers engaged in the sector. (5) A measure 'of the flow of capital services used in the sector. (6) Hours of all persons combined with capital input, using labor and capital shares of output as weights.

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