Multifactor productivity accounts for the effects of both capital and labor. It is designed to measure the joint influences of technological change, efficiency improvements, and other factors of economic growth. Multifactor productivity grew 0.9 percent annually from 1987 to 2015 in private nonfarm businesses. Over the 2007–15 period, multifactor productivity grew 0.4 percent per year on average.
Annual labor productivity growth is made up of three parts: multifactor productivity growth, capital intensity, and shifts in labor composition. In the 2007–15 period, annual labor productivity growth in private nonfarm businesses slowed significantly to 1.2 percent. Labor productivity grew 2.9 percent per year during the 1995–2000 period and 2.6 percent per year from 2000 to 2007.
For the 2007–15 period, private nonfarm business labor productivity growth slowed because multifactor productivity and capital intensity fell below pre-1995 levels. The contribution of labor composition slightly increased. Over this period, capital intensity added 0.5 percentage point and labor composition added 0.3 percentage point to labor productivity growth.
These data are from the Multifactor Productivity program. To learn more, see "Preliminary Multifactor Productivity Trends — 2015," (HTML) (PDF). Multifactor productivity is calculated by dividing an index of real output by an inex of combined units of labor input and capital services. Unlike BLS quarterly labor productivity (output per hour worked) measures, multifactor productivity measures include the influences of capital services and shifts in the composition of the workforce.
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