Multifactor productivity trends, 2016

Private nonfarm business sector multifactor productivity decreased at a  0.2-percent annual rate in 2016, the U.S. Bureau of Labor Statistics  reported today. (See chart 1, table A.) This 2016 decline reflected a  1.7-percent increase in output and a 1.9-percent increase in the combined inputs of capital and labor. Capital services grew by 2.4 percent and  labor input–which is the combined effect of hours worked and labor  composition–grew by 1.6 percent. This was the first decline in multifactor productivity growth since 2009. (See table 1.)  Multifactor productivity is calculated by dividing an index of real output  by an index of combined units of labor input and capital services. Multifactor productivity annual measures differ from BLS quarterly labor productivity  (output per hour worked) measures because the former also includes the  influences of capital services and shifts in the composition of the workforce. Measures for the most recent year of this release are preliminary  estimates. See the Technical Notes for additional information.  Private business sector multifactor productivity decreased at a 0.1-percent annual rate in 2016. A 1.8-percent increase in output and a 1.9-percent  increase in the combined inputs of capital and labor resulted in the  multifactor productivity decline in 2016. (See table 2, table A.)  Trends in the private nonfarm business sector  Multifactor productivity in the private nonfarm business sector grew at an average annual percent rate of 0.9 percent from 1987 to 2016. For the 2007-2016 period, multifactor productivity grew 0.4 percent on average as combined inputs increased at an average annual rate of 1.0 percent and output increased at a 1.4 percent average annual rate. The increase in combined  inputs reflected a 1.7-average annual percent increase in capital services  along with an increase in labor input at an average annual rate of 0.7  percent. (See table A.)