5260.0.55.002 - Estimates of Industry Multifactor Productivity, 2015-16  
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 05/12/2016   
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ANALYSIS OF RESULTS

MARKET SECTOR

On an hours worked basis, market sector multifactor productivity (MFP) grew 0.9% in 2015-16. This year marked the fifth consecutive year of un-interrupted MFP growth, and was the result of 2.4% increase in gross value added and a 1.5% increase in combined labour and capital inputs. On the inputs side, capital services growth was stronger (+2.3%) than hours worked (+0.9%), while labour productivity (LP) recorded 1.5% growth for the year.

On a quality adjusted hours worked basis, labour input growth was 1.4%, a result 0.5% higher than labour inputs on hours worked basis. Consequently, quality adjusted MFP grew 0.6% and labour productivity was up 1.0% for 2015-16. The weaker growth in quality adjusted labour productivity reflects a positive contribution from changes to labour composition, due to educational attainment and work experience.

CHART 1: MARKET SECTOR PRODUCTIVITY, Hours worked basis
CHART 1: MARKET SECTOR PRODUCTIVITY, Hours worked basis




TABLE 1: KEY FIGURES, 2015-16

Hours Worked Basis
Quality Adjusted
Hours Worked Basis
% Change
% Change

Multifactor Productivity
0.9
0.6
Gross Value Added
2.4
2.4
Labour Input
0.9
1.4
Capital Input
2.3
2.3
Labour Productivity
1.5
1.0





INDUSTRIES

In 2015-16, ten of the 16 market sector industries recorded positive MFP growth, on an hours worked basis. Particularly significant was the MFP growth in Rental, hiring and real estate services (+8.2%), Wholesale trade (+7.2%) and Information, media and telecommunications (+5.2%), as shown in Chart 2.

CHART 2: PRODUCTIVITY GROWTH, By Market Sector Industries, hours worked basis

CHART 2: PRODUCTIVITY GROWTH, By Market Sector Industries, hours worked basis



Rental, hiring and real estate services recorded the strongest growth in gross value added (+9.5%), which, coupled with a moderate growth in combined inputs (+1.2%), resulted in the largest MFP growth for an individual industry. Wholesale trade recorded an increase in MFP of 7.2%, driven by the strong gross value added growth (+3.4%) together with a strong decline in the labour inputs (-6.7%).

The largest decreases in MFP were for Administrative and support services (-6.5%), Agriculture, forestry and fishing (-6.3%) and Professional, scientific and technical services (-3.0%).

In 2015-16, on an hours worked basis, labour productivity growth was particularly strong for Wholesale trade (+10.8%), Rental, hiring and real estate services (+10.5%), and Information, media and telecommunications (+9.0%). For Wholesale trade, strong labour productivity gain was primarily driven by a significant decline in the use of labour (-6.7%). In Rental, hiring and real estate services, labour productivity growth was predominantly driven by growth in gross value added (+9.5%).


Graph Image for PRODUCTIVITY GROWTH - PART 1

Graph Image for PRODUCTIVITY GROWTH - PART 2


Graph Image for INPUT, OUTPUT AND MFP GROWTH - PART 1

Graph Image for INPUT, OUTPUT AND MFP GROWTH - PART 2



INDUSTRY SPOTLIGHT – MINING

Mining recorded a MFP growth of 2.5% mainly due to strong output growth of 6.2% and weaker capital services growth (4.0%), reflecting the tapering off of capital expenditure. Significant MFP growth in Mining in the last two years has signalled a transition from an investment phase into a production phase.

Chart 4 depicts the cumulative contributions to value added output growth in Mining sector. For the period of 1989/90 to present, the contribution from capital services has been the predominant source of growth in gross value added, while there has only been a modest contribution from hours worked. Falling MFP growth saw all of the productivity gains made since 1989-90 wiped out by 2007-08. The MFP decline continued until 2013-14 however has turned the corner since, posting positive MFP growth in both 2014-15 and 2015-16.

CHART 4: CUMULATIVE CONTRIBUTIONS TO VALUE ADDED OUTPUT GROWTH - MINING

CHART 4: CONTRIBUTIONS TO GROWTH IN GROSS VALUE ADDED - MINING

TABLE 2: KEY FIGURES, By Market Sector Industries, hours worked basis, annual percentage change

MFP
Gross Value Added
Labour input
Capital input
Labour productivity

Agriculture, forestry and fishing
-6.3
-5.0
3.6
0.5
-8.3
Mining
2.5
6.2
2.7
4.0
3.4
Manufacturing
1.2
-2.7
-5.1
-1.4
2.5
Electricity, gas, water and waste services
-0.1
2.1
2.8
1.9
-0.7
Construction
1.1
2.8
1.4
2.2
1.3
Wholesale trade
7.2
3.4
-6.7
2.8
10.8
Retail trade
0.6
3.1
2.4
3.1
0.8
Accommodation and food services
0.2
0.8
0.7
0.6
0.2
Transport, postal and warehousing
-1.1
0.9
2.0
2.1
-1.0
Information, media and telecommunications
5.2
6.7
-2.1
4.1
9.0
Financial and insurance services
1.9
4.6
3.9
1.9
0.6
Rental, hiring and real estate services
8.2
9.5
-0.8
2.7
10.5
Professional, scientific and technical services
-3.0
0.2
3.1
4.6
-2.8
Administrative and support services
-6.5
-1.3
5.6
4.2
-6.5
Arts and recreation services
-2.6
2.9
7.2
2.8
-3.9
Other services
1.0
1.0
-1.0
7.3
2.1
Market sector (16)
0.9
2.4
0.9
2.3
1.5





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. By analysing averages of productivity statistics between growth cycle peaks, the effects of some temporary influences (such as variation in capital utilisation) can be minimised, allowing better analysis of the drivers of productivity growth in different periods.

Over the current incomplete growth cycle, MFP in the market sector on an hours worked basis grew 0.3% per year on average. Gross value added grew a moderate 2.5% per year over the same period, while labour input grew 0.6% per year and capital input grew 4.4% per year. On a quality adjusted hours worked basis, market sector MFP was flat at 0.0% per year.

Labour productivity on an hours worked basis grew 1.9% per year on average over the current incomplete growth cycle. On a quality adjusted hours worked basis, labour productivity grew 1.4% per year on average. The weaker growth in quality adjusted labour productivity reflects a positive contribution from changes to labour composition.

TABLE 3: KEY FIGURES, by growth cycle, average percentage change

Growth Cycles
Current incomplete growth cycle
1998-99 to 2003-04
2003-04 to 2007-08
2007-08 to 2015-16

Multifactor Productivity – Hours worked basis
1.1
-0.4
0.3
Gross Value Added
3.5
3.6
2.5
Labour Input
1.3
2.5
0.6
Capital Input
4.2
6.2
4.4
Labour Productivity
2.3
1.2
1.9
Multifactor Productivity – Quality adjusted hours worked basis
0.8
-0.7
0.0
Gross Value Added
3.5
3.6
2.5
Labour Input
1.7
2.9
1.1
Capital Input
4.2
6.2
4.4
Labour Productivity
1.8
0.7
1.4

Note: The reported percentage changes are based on natural log growth x 100