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Although MFP is the more comprehensive measure of productivity, the ABS also produces industry labour productivity indexes. One measure of labour productivity, an index of industry GVA in volume measures per hour worked, is useful because it is available for each market sector industry.
Labour productivity is constant if there is no change in the amount produced (volume GVA) per hour worked. Changes in this ratio reflect changes in the average skill or productivity level of the workforce. This measure reflects not only the contribution of labour to changes in production but also the contribution of capital and other factors (e.g. technological changes and managerial efficiency).
Movements in employment and hours worked tend to lag movements in GDP. The implication being, in the period of the growth cycle when the growth in output starts to decline, indexes of labour productivity are likely to decline sharply, particularly if rapid growth in GDP is abruptly ended. Conversely, labour productivity indexes are likely to grow strongly when the economy comes out of a cyclical trough.
Graph 13.12 shows the average annual rate of growth in the amount produced per hour worked for market sector industries over the previous two business growth cycles (1993-94 to 1998-99, and 1998-99 to 2003-04). Over these periods, the average annual growth rate of the market sector as a whole was 2.3%, and 1.9% respectively.
Most of the market sector industries increased their productivity per hour worked. In the last business cycle (1998-99 to 2003-04) the industries with the highest average annual productivity growth rates were Agriculture, forestry and fishing (5.8%), Manufacturing (3.9%), Wholesale trade (3.4%) and Transport and storage (3.4%). Negative growth is seen only in the Electricity, gas and water supply (-2.5%) and Mining (-0.3%) industries.
In the previous business growth cycle (1993-94 to 1998-99) Electricity, gas and water supply (7.2%), Wholesale trade (5.9%) and Communication services were the top three industries in terms of growth in amount produced per hour worked. In the previous cycle, negative growth in amount produced per hour worked was only seen in the Cultural and recreational services industry (-1.8%).
The average annual rate of growth for a large number of market sector industries had fallen between the two business cycles (1993-94 to 1998-99 and 1998-99 to 2003-04). The largest decreases were in the Electricity, gas and water supply (-9.7 percentage points), Mining (-3.7 percentage points) and Communication services (-3.6 percentage points) industries.