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5204.0 - Australian System of National Accounts, 2005-06  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 01/11/2006   
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PRODUCTIVITY


Multifactor Productivity
Labour Productivity
Productivity Growth Cycles


MULTIFACTOR PRODUCTIVITY

Growth in Multifactor productivity (MFP) was flat in the market sector in 2005-06. In addition to the growth in labour input of 0.3%, there was a strong increase capital services in 2005-06 of 5.6%. Total combined inputs (capital services and labour) grew by 2.6% compared to output growth of 2.6%.


MFP and labour productivity indexes exhibit similar patterns. This is mainly due to capital services(footnote 1). See Investment at Current Prices for more details.) exhibiting smoother growth compared to labour inputs. This generally smoother pattern of growth in capital services reflects the fact that in any one period the new additions to the capital stock are only a small proportion of the total capital stock available to the economy.

Multifactor productivity, (2004-05 = 100.0)
Graph: Multifactor productivity, (2004–05 = 100.0)
View underlying data tables as a Lotus 123 File:
5204.0 Table 22. PRODUCTIVITY IN THE MARKET SECTOR(a), 19Kb
(Help:
Lotus 123)


LABOUR PRODUCTIVITY

Since 1983-84, the volume of Market sector labour input has grown by 1.3% per year on an hours worked basis (experimental series), and by 1.7% per year on a quality adjusted hours worked basis. This reflects a 0.4% per year improvement in the quality of labour over the period, measured in terms of educational attainment and work experience. The faster growth in the quality adjusted input measure is reflected in the lower growth in quality adjusted productivity measures, relative to unadjusted estimates. That is, some of the growth in the unadjusted measure can be attributed to quality changes which are explicitly measured in the quality adjusted measures.


In 2005-06, labour productivity for the market sector increased by 2.2%, reflecting a 0.3% increase in the hours worked measure of labour input, against a 2.6% increase in market sector output (GDP). The quality adjusted labour productivity increased by 1.8%, indicating an improvement in the composition of labour in the labour force. The figure below shows labour productivity for hours worked basis and a quality adjusted hours worked basis.

Labour inputs, (2004-05 = 100.0)
Graph: Labour inputs, (2004–05 = 100.0)
Labour productivity, (2004-05 = 100.0)
Graph: Labour productivity, (2004–05 = 100.0)
View underlying data tables as a Lotus 123 File:
5204.0 Table 22. PRODUCTIVITY IN THE MARKET SECTOR(a), 19Kb
(Help:
Lotus 123)



PRODUCTIVITY GROWTH CYCLES

A common method of examining changes in productivity over an extended period involves identifying and dividing the data into productivity 'growth cycles'. The reason for this relates to the natural variations in productivity growth present within the business cycle and how these relate to measurement issues, such as the ability to capture capacity utilisation within the input statistics. This means that year to year changes in estimates may not be truly indicative of a change in productivity. By analysing average productivity statistics between growth cycle peaks, the effects of some of these influences can be minimised, and therefore allow better analysis of the drivers of growth in different periods.


Productivity growth cycle peaks are determined by comparing the original MFP estimates with their corresponding long-term trend estimates(footnote:2). The long-term trend estimates are calculated using an 11-term Henderson moving average of the original, annual indexes.). The peak deviations between these two series are the primary indicators of a growth-cycle peak, although the more general economic conditions at the time are also considered. The most recent cycle was for the period 1998-99 to 2003-04.


The figure belong provides an indication of the longer term changes in productivity growth over the last 40 years. It is worth highlighting the cycle from 1993-94 to 1998-99, as it represents the largest average increase in MFP in the series. This was the result of strong growth in market sector output outweighing the growth in observed inputs (labour and capital). In contrast to this cycle is the 1984-85 to 1988-89 cycle, where similar growth in market sector output was recorded, but was offset by relatively larger increases in inputs, particularly labour, and hence lower MFP growth. See table 23 for more details.

Multifactor productivity cycles, (2004-05 = 100.0)
Graph: Multifactor productivity cycles, (2004–05 = 100.0)

View underlying data tables as a Lotus 123 File:

5204.0 Table 23. PRODUCTIVITY IN THE MARKET SECTOR(a), Growth cycle analysis, 6Kb
(Help:
Lotus 123)


For more information please refer to Estimates of productivity in the Australian National Accounts (Feature article).

Footnotes:
  1. Capital estimates in this issue have also been subject to revisions which have affected these Productivity estimates Back
  2. The long-term trend estimates are calculated using an 11-term Henderson moving average of the original, annual indexes.) Back

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