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Tag Archives: Output

Expanding BLS Data on Total Factor Productivity

Our data on multifactor productivity are getting a makeover. You’ll get the same great data but with a new name, “total factor productivity.” Why change the name if it’s the same data? To reach you! More web searches seek total factor productivity than multifactor productivity. That’s probably because most other countries, including our major trading partners, call it total factor productivity. We want to make it easier to find us and stop having to answer how multifactor productivity differs from total factor productivity. They’re the same thing!

Besides the name change, we will expand our annual release of trends in total factor productivity for manufacturing to include not only manufacturing, but all the major industries in the private sector. With this addition, total factor productivity measures for all private major industries of the economy will be available in our news release and the BLS database.

Back to Basics

For those new to productivity data, let’s back up a bit. What is productivity and why should we care about it?

Productivity is a measure of economic performance, often touted as the engine of a nation’s economic growth. Productivity compares the output of goods and services with the inputs used to produce them. The difference in growth rates between these two amounts—the unexplained portion—equals productivity growth. Productivity tells us how good we are at using the inputs to create the output.

Productivity growth is important because, in the long run, it accounts for a third of the growth in a nation’s output. This growth supports increased wages, profits, public sector revenue, and global competitiveness. There are two types of productivity measures produced by BLS, labor productivity and total factor productivity. They are similar, as you can see in the chart below, but they have key differences.

Labor and total factor productivity, annualized percent change, private nonfarm business, 2010–19

Editor’s note: Data for this chart are available in the table below.

Much of the limelight goes to labor productivity, output per hour worked, which measures how many hours it takes to produce the goods and services in our economy. This measure is pretty simple to interpret and apply. If you used the same number of hours but produced more goods and services than last year, the economy became more efficient and labor productivity increased. Labor productivity increased because something besides worker hours (which we know stayed the same) contributed to the increased output. That something is productivity—the growth we didn’t account for in the calculation. With labor productivity, we only account for one input—hours worked. All the other inputs to production, like capital investment and materials, get lumped together into the unknown efficiency gains that can result from changes in technology or how work is organized.

This is where total factor productivity comes in. As the name suggests, total factor productivity measures more than just labor as an input to producing goods and services. It puts more “knowns” into the equation to help us pinpoint a more detailed story of why productivity is changing. For an industry, total factor productivity measures the output produced by a combined set of inputs: capital, labor, energy, materials, and purchased services. Total factor productivity tells us how much more output can be produced without increasing any of these inputs. The more efficiently an industry uses its inputs to create output, the faster total factor productivity will grow.

Total factor productivity gives us great insight into what drives economic growth. Is it the industries’ choice of capital investment? Better or more skilled labor? Or is it a change to the other factors of production, such as energy expenditures, materials consumed, or services purchased, or more efficient use of these inputs? The more detail with which we measure an industry, the more we can learn how these choices contribute to growth in this industry and ultimately our economy.

Let’s recap what we know:

Total factor productivity = output ÷ (combined inputs of capital, labor, energy, materials, and services)

And if we rearrange this equation and transform it to growth over time, we can see that increasing total factor productivity is a way to increase our nation’s output growth.

Output growth = total factor productivity growth + combined inputs growth

More is More

Previously, the annual release on Multifactor Productivity Trends in Manufacturing brought you information on the manufacturing sector and its 19 detailed industries. The manufacturing sector has often been a pioneer of technological development that drives productivity growth and is thus an important sector of the nation’s economy. You can see just how big of a role it has played in productivity growth in The Economics Daily.

And now we are providing a more complete picture. Not only will you get the first comprehensive look into what the COVID-19 pandemic in 2020 meant for labor, capital, and more, but we also will include all major industries and not just manufacturing. The chart below gives a taste of the expanded information that we will now include in the reimagined release with a new name. For example, we can see that in 2019, the information industry had strong output growth (third highest), stemming mostly from combined inputs growth and total factor productivity growth (those things that are harder to measure).

Percent change in total factor productivity, combined inputs, and output, by major private industry, 2019

Editor’s note: Data for this chart are available in the table below.

Connecting Total Factor Productivity to Labor Productivity

We can use total factor productivity and combined inputs for more than just an explanation of output growth. These measures give us is a way to break down the growth of labor productivity. We are the Bureau of Labor Statistics after all, so using our data to understand the growth in efficiency of the nation’s workforce is important.

We can express labor productivity growth as the sum of the growth of six components:

  • Total factor productivity
  • Contribution of capital intensity
  • Contribution of labor composition (shifts in the age, education, and gender composition of the workforce)
  • Contribution of energy
  • Contribution of materials
  • Contribution of purchased services

The contribution of each input is the ratio of the services provided by that input to hours worked. When we look at the contribution of each input, we can measure the effect of increasing the use of that input on an industry’s labor productivity.

The chart below shows sources of labor productivity in 2019 for each industry. The information industry had the second largest increase in labor productivity, rising 5.9 percent. That increase was driven by an increase in capital of 2.8 percent and total factor productivity growth of 1.5 percent. Knowing what drives productivity helps businesses make better decisions and pass those efficiencies on to workers and customers.

Sources of labor productivity change (in percentage points) by major private industry, 2019

Editor’s note: Data for this chart are available in the table below.

We will release new annual data for Total Factor Productivity in 2020 on November 18, 2021, at 10:00 a.m. Eastern Time. More detailed industry data are also available. For more information on productivity check, out our Productivity page. Want to help us improve our productivity data and publications? Please fill out our 10-minute survey by November 16, 2021.

Labor and total factor productivity, annualized percent change, private nonfarm business, 2010–19
YearLabor ProductivityTotal Factor Productivity




















Percent change in total factor productivity, combined inputs, and output, by major private industry, 2019
IndustryOutputCombined inputsTotal Factor Productivity



Management of companies


Professional and technical services

Administrative and waste services

Real estate and rental and leasing

Accommodation and food services

Retail trade

Health care and social assistance

Transportation and warehousing

Arts, entertainment, and recreation

Finance and insurance


Agriculture, forestry, fishing, and hunting


Educational services




Other services, except government




Nondurable manufacturing




Durable manufacturing


Wholesale trade

Sources of labor productivity change (in percentage points) by major private industry, 2019
IndustryServices intensityMaterials intensityEnergy intensityLabor compositionCapital intensityTotal Factor Productivity

Management of companies





Arts, entertainment, and recreation

Administrative and waste services

Retail trade


Accommodation and food services


Finance and insurance

Professional and technical services


Health care and social assistance


Real estate and rental and leasing




Other services, except government


Agriculture, forestry, fishing, and hunting


Nondurable manufacturing




Durable manufacturing


Transportation and warehousing


Wholesale trade




Educational services


Productivity Perspective of the 2020 COVID-19 Pandemic

Labor productivity, a key measure of the health of the U.S. economy, had been rising steadily but slowly throughout the 2010s—just over one percent per year on average. But what happens when the economy is thrown into a sudden decline by an unprecedented shock? COVID-19 landed in the United States in the early months of 2020, and it did not take long for its effects on productivity to hit hard and fast.

First, some background. Labor productivity is the ratio of real output to hours worked. Productivity increases when the output of goods and services increases faster than the amount of labor needed to produce the goods and provide the services. Productivity growth is often thought to show that businesses are becoming more efficient and profitable, but the path to positive productivity is not always desirable. Productivity may also increase when output falls but hours worked fall faster.

During 2020, two distinct paths yielded positive productivity growth. From the first quarter to the second quarter of 2020, hours worked decreased more than output. We can think of this path as businesses rapidly cutting hours and employment faster than output fell. Conversely, in the third quarter of 2020, the economy began to rebound, and the increase in demand for goods and services outpaced the rising labor hours, also resulting in positive labor productivity growth. (See chart 1).

When looking at the growth rates for output, hours worked, and productivity, we annualize the numbers, meaning these are the growth rates we would observe if the change in a quarter were to continue at that rate for an entire year. The data presented here are for the nonfarm business sector, covering about three-fourths of the U.S. economy, from the end of 2019 to the end of 2020. Although we report labor productivity measures quarterly, we incorporated higher frequency data to more accurately capture the rapid changes resulting from the COVID-19 pandemic.

Chart 1. Output, hours worked, and labor productivity, nonfarm business sector, fourth quarter 2019 to fourth quarter 2020

Editor’s note: Data for this chart are available in the table below.

First Quarter 2020, Pandemic on the Horizon

Although the COVID-19 pandemic began during the first quarter of 2020, data from January and February were not significantly affected by the pandemic; business closures and job losses didn’t occur until the latter part of March. Since only one out of three months in the first quarter was affected, the decreases were modest compared to what was to come in the second quarter. Nevertheless, both output (-6.4 percent) and hours worked (-5.6 percent) declined in the first quarter, the first decreases since the second quarter of 2009. The declines in first quarter 2020 were an early sign of the drastic decreases we were about to see. While labor productivity declined only 0.8 percent at an annual rate in the first quarter, this was the first decline in labor productivity since the second quarter of 2017.

Second Quarter 2020, COVID-19 Rears Its Ugly Head

The second quarter of 2020 saw historically large decreases in both output and hours worked. Our measures of nonfarm business began in 1947, and the second quarter of 2020 had the largest declines ever recorded in both output (-36.8 percent) and hours worked (-43.2 percent). While the resulting labor productivity growth of 11.1 percent was the largest increase since the first quarter of 1971 (12.3 percent), the large increase in second quarter 2020 resulted from the devastation of the U.S. economy in terms of both employment and output.

How can productivity grow at near a record rate with such large declines in output and hours worked? Remember the different paths to positive labor productivity. Many consumers avoided stores, restaurants, and other public gatherings to reduce the risk of catching or spreading the virus that causes COVID-19. With shutdowns of nonessential businesses and limited contact and other restrictions for businesses still opened, businesses had to adapt quickly to reduce work hours while trying to preserve output. For example, many eating establishments focused on carryout and outdoor seating to limit their revenue loss. Additionally, online buying and home delivery became more widespread. The data from the second quarter show hours worked fell faster than output, resulting in productivity growth.

Third Quarter 2020, the Road to Recovery

By the third quarter of 2020, both output and hours worked began to climb again and in a big way. Many more businesses had shifted operations online or tried to bring workers back and resume normal operations. Following the historically large declines in the second quarter, we saw historically large increases in the third quarter in both output (44.1 percent) and hours worked (38.3 percent). With output recovering more quickly than hours worked, labor productivity grew by a robust 4.2 percent.

The automotive industry is one that highlights the jumpstart to recovery. In the second quarter, automotive production factories stopped almost entirely, resulting in output and hours worked plummeting. Once they started to reopen in the third quarter, both hours worked and output rebounded. While the third quarter outcome was positive, both output and hours worked still had not returned to their values before the pandemic, meaning much more work remained to fully recover. It is important to remember nonfarm employment at the end of the third quarter was still 10.7 million below the level at the start of the pandemic.

Fourth Quarter 2020, on the Right Track

The fourth quarter continued the large growth for both output (5.5 percent) and hours worked (10.1 percent). This quarter shows how negative productivity is not always a negative thing. In this case, hours worked outpaced output growth, leading to a productivity decline.

When we look over the past year, we see that we are digging out of the huge decline in the second quarter of 2020. The fourth quarter of 2020 was the second straight increase in both hours and output. In the fourth quarter of 2020, output was only 2.6 percent below the level a year earlier, and hours worked were 4.9 percent below. (See chart 2). After the labor productivity rollercoaster ride of 2020, the fourth quarter data suggest things may be on a path to normalcy.

Chart 2. Output and hours worked indexes, nonfarm business sector, fourth quarter 2019 to fourth quarter 2020

Editor’s note: Data for this chart are available in the table below.

Pandemic in Perspective

So how does productivity in a pandemic compare with other major economic events like the Great Recession? From 2007 to 2009, both output and hours worked declined (see chart 3), as the U.S. economy endured a period known as the “Great Recession.” (To learn more, see “Below Trend: the U.S. productivity slowdown since the Great Recession.”) In 2020, both output and hours worked declined at the start of the pandemic. The wild changes from quarter to quarter during the rest of the year were unprecedented, even for an economic downturn. Over the past decade, the movements in output, hours, and productivity were usually small, making 2020 even more unusual.

The last time productivity growth was close to what it was in the second quarter of 2020 was in the second quarter of 2009. Labor productivity typically spikes at the start of an economic recovery because output rises faster than businesses can restore hours. In both the Great Recession and the 2020 pandemic, the magnitude of the changes in output and hours worked were larger than usual. In the Great Recession it took several quarters to see gains in hours worked, whereas 2020 saw a faster turnaround as businesses began to reopen and government restrictions eased in the third quarter. In fact, hours worked in the fourth quarter of 2020 grew faster than output, causing productivity to decline.

Chart 3. Output, hours, and  labor productivity indexes in the nonfarm business sector, 2007–20

Editor’s note: Data for this chart are available in the table below.

BLS labor productivity data help us study efficiencies and the economic well-being of the country. Positive labor productivity isn’t always positive. The components that make up the labor productivity measure—output and hours worked—should not be examined alone but rather together to fully understand productivity’s effect on economic growth.

During unprecedented events like the COVID-19 pandemic, historical trends in productivity can provide important context into the economic environment. We at BLS, like many of you, will be very interested to see how the economy recovers and what that will mean for productivity and the economy.

Want to Learn More?

To dive into the data for yourself, check out the BLS webpages on labor productivity. Get the most recent news release to see the data firsthand! Check out Productivity 101 and our video “What is Productivity?” to learn more about the concepts of productivity.

If you have a specific question, you might find it answered in our Frequently Asked Questions. Or you can always contact our staff by email or call (202) 691-5606.

Chart 1. Output, hours worked, and labor productivity, nonfarm business sector, fourth quarter 2019 to fourth quarter 2020
QuarterOutputHours workedLabor productivity

Q4 2019


Q1 2020


Q2 2020


Q3 2020

Q4 2020

Chart 2. Output and hours worked indexes, nonfarm business sector, fourth quarter 2019 to fourth quarter 2020
QuarterOutputHours worked

Q4 2019


Q1 2020


Q2 2020


Q3 2020


Q4 2020

Chart 3. Output, hours, and labor productivity indexes in the nonfarm business sector, 2007–20
QuarterOutputHours workedLabor productivity

Q1 2007


Q2 2007


Q3 2007


Q4 2007


Q1 2008


Q2 2008


Q3 2008


Q4 2008


Q1 2009


Q2 2009


Q3 2009


Q4 2009


Q1 2010


Q2 2010


Q3 2010


Q4 2010


Q1 2011


Q2 2011


Q3 2011


Q4 2011


Q1 2012


Q2 2012


Q3 2012


Q4 2012


Q1 2013


Q2 2013


Q3 2013


Q4 2013


Q1 2014


Q2 2014


Q3 2014


Q4 2014


Q1 2015


Q2 2015


Q3 2015


Q4 2015


Q1 2016


Q2 2016


Q3 2016


Q4 2016


Q1 2017


Q2 2017


Q3 2017


Q4 2017


Q1 2018


Q2 2018


Q3 2018


Q4 2018


Q1 2019


Q2 2019


Q3 2019


Q4 2019


Q1 2020


Q2 2020


Q3 2020


Q4 2020


Why This Counts: Measuring Industry Productivity

At BLS, productivity is the economic statistic that describes the efficiency of production. The productivity statistics you hear about most often in the news are for the entire U.S. economy. But there’s more to the productivity story than just the overall numbers. The economy is made up of hundreds of industries, and each one works in a different way. Productivity data for each industry help us understand how specific types of production have changed over time. Let’s look at a few specific industries to see how labor productivity data can enhance our understanding of their unique production systems.

General Freight Trucking: Technological Innovations

Economic conditions in the general freight trucking industry closely mirror the health of the overall economy. During the 2007–09 recession, both output and hours worked fell dramatically in trucking. Because employment and spending were down nationwide, there was less demand for the transportation of all kinds of goods. After the recession ended, output and hours in trucking picked back up. Output reached prerecession levels by 2014, but in 2018 hours worked were still slightly below their 2007 level.

Dividing output by hours worked yields labor productivity. Because output in trucking has grown faster than hours during the recovery from the recession, labor productivity has increased. This helps us understand the nature of operations in general freight trucking. Innovative technologies such as communications systems, mapping software, and truck-based sensors and monitors known as “telematics” have improved transportation efficiency. These systems allow deliveries to be planned more efficiently with fewer delays, allowing more freight to be delivered without an equivalent increase in worker hours.

General freight trucking, average yearly percent change in output, hours worked, and productivity from 2007 to 2018

Editor’s note: Data for this chart are available in the table below.

Travel Agencies: Digital Transformation

Another industry that has changed the way it operates is travel agencies. Since 2000, output has increased substantially, while hours fell from 2000 to 2010 and have increased only slightly since then. The major transformation for travel agencies has been the Internet. Online tools have allowed clients to make travel reservations with far less help from workers. This increase in efficiency is reflected in the industry’s labor productivity, which has more than tripled from 2000 to 2017.

Travel agencies, average yearly percent change in output, hours worked, and productivity from 2000 to 2017

Editor’s note: Data for this chart are available in the table below.

Supermarkets: Incremental Change

Changes in other industries have been more subtle. Supermarkets are a particularly competitive industry, and firms employ a large number of workers to maintain high levels of customer service. Managing inventories, stocking shelves, checking out merchandise, and staffing specialty stations are all tasks that supermarkets continue to need. But even in supermarkets, productivity has been increasing since 2009, as output has grown faster than worker hours. To continue growing sales with lower costs, many firms in this industry have relied more on labor-saving technology, such as self-checkout machines. This technology increases efficiency by allowing supermarkets to process more transactions with less help from workers.

Supermarkets, average yearly percent change in output, hours worked, and productivity from 2009 to 2018

Editor’s note: Data for this chart are available in the table below.

Cut and Sew Apparel Manufacturing: Establishment Turnover

Productivity declines also can show the changing nature of work. Cut and sew apparel manufacturing has seen much of its production move outside the United States. In 2018, U.S. apparel manufacturers produced less than 15 percent of the output they produced in 1997. Although worker hours also have declined, they have not dropped as much as output, leading to a decline in labor productivity. This indicates a shift over time in the nature of the average apparel manufacturer. While many large establishments moved overseas in search of cheaper labor, the remaining domestic apparel manufacturing establishments are on average smaller and more specialized, requiring more labor-intensive work.

Cut and sew apparel manufacturing, average yearly percent change in output, hours worked, and productivity from 1997 to 2018

Editor’s note: Data for this chart are available in the table below.

To Learn More

BLS industry productivity data help us study the efficiencies of economic activities. Historical trends in productivity provide an important window into each industry’s working conditions, competitiveness, contribution to the economy, and potential for future growth. These data are used by investors, business leaders, jobseekers, researchers, and government decision makers. We have annual labor productivity measures for over 275 detailed industries.

To dive into the data for yourself, check out the BLS webpages on labor productivity. You also can see productivity data in a brand new way using our industry productivity viewer! Even more specialized industry data are on our webpages for hospitals, construction industries, elementary and secondary schools, and urban transit systems. We also have a recent article on productivity in grocery stores.

Average yearly percent change in output, hours worked, and productivity in selected industries
IndustryOutputHours workedProductivity

General freight trucking, 2007 to 2018


Travel agencies, 2000 to 2017


Supermarkets, 2009 to 2018

Cut and sew apparel manufacturing, 1997 to 2018