Multifactor productivity indexes relate the change in output to the change in the combined inputs of labor, capital, and intermediate purchases consumed in producing that output. Multifactor productivity measures the joint influences on economic growth of a variety of factors, including technological change, returns to scale, enhancements in managerial and staff skills, changes in the organization of production, and other efficiency improvements.
Output rose in fewer manufacturing industries in 2008 than in 2007. Output rose in only 17 of 86 manufacturing industries in 2008, compared to 39 in 2007. Combined inputs fell in more industries, 65 in 2008 compared to 54 in 2007. Labor hours fell in 67 manufacturing industries in 2008, while intermediate inputs fell in 65 industries and capital services fell in 43 industries.
Among the largest manufacturing industries (those with employment over 300,000), multifactor productivity rose most in the semiconductors and electronics components industry (7.2 percent)followed by the medical equipment and supplies industry (4.5 percent). Multifactor productivity rose modestly in the largest manufacturing industry, printing and related support activities (0.4 percent). Aerospace products and parts posted the largest multifactor productivity decline (11.5 percent) in 2008 among the largest industries.
Multifactor productivity increased in fewer manufacturing industries in 2008 than over the longer-term period from 1987 to 2008. Between 1987 and 2008, multifactor productivity increased in 45 of 86 manufacturing industries (52 percent). Output increased in 60 industries while combined inputs increased in 59 industries over the period.
In 2008 multifactor productivity rose in air transportation, as output declined 3.1 percent and combined inputs, led by reductions in intermediate inputs, dropped 3.7 percent. Multifactor productivity in line-haul railroads fell, as output declined 1.0 percent and combined inputs increased 0.9 percent.
Productivity performance was worse in 2008 than over the 1987-2008 period for both industries. Multifactor productivity in air transportation rose at an average annual rate of 1.0 percent over the period, as output rose 3.1 percent annually and combined inputs rose 2.1 percent per year. Multifactor productivity in line-haul railroads grew 2.2 percent per year on average from 1987 to 2008, as output rose 2.2 percent per year and combined inputs showed no change.