Measurement of productivity growth in U.S. manufacturing

The indexes of multifactor productivity for two-digit manufacturing sectors prepared by the Bureau of Labor Statistics for sectors in manufacturing have been revised and extended to cover the 1949–92 period. These indexes, also called the “KLEMS” multifactor measures, compare changes in output to changes in a composite of all the inputs used in production—capital, labor, energy inputs, nonenergy material inputs, and business services.1 Because of this comprehensive input list, these indexes give an indication of advances in technology and production efficiency in these broad sectors, important topics as the economy emerges from the recession of the early 1990’s. This article discusses the measurement of multifactor productivity for manufacturing and analyzes growth trends within the sector. Through the years, a wide variety of productivity statistics have appeared in the literature, distinguished by the concepts underlying the measurement of output, the methods of aggregation, and the inputs included for analysis. Recent additions of “superlative” indexes of gross domestic product (GDP) by industry to the U.S. National Income and Product Accounts, prepared by the Bureau of Economic Analysis, U.S. Department of Commerce, have enhanced available alternatives for measuring manufacturing productivity. Planned changes in the way BLS measures manufacturing productivity are also discussed.2 Multifactor productivity growth trends are then examined for the overall manufacturing sector and for 19 two-digit SIC manufacturing Measurement of productivity growth in U.S. manufacturing