Estimates of Industry Level KLEMS Multifactor Productivity

The KLEMS framework provides a detailed statistical decomposition on the contributions to output growth. The contributions to output are represented by five input categories - capital (K), labour (L), energy (E), materials (M), and services (S). The KLEMS representation enables analysis on changes to the input mix, such as the role of labour hours and composition of relative capital services or intermediate inputs, observed in industry output growth.

In 2023-24, KLEMS MFP fell, on quality adjusted hours worked basis, in nine of the sixteen market sector industries.

Arts and recreation services experienced the largest decline in industry KLEMS MFP.

KLEMS MFP fell 4.9% as gross output growth (2.8%) was outpaced by the contributions from hours worked (4.9 percentage points (ppts)) and intermediate inputs (2.6 ppts).

Gross output grew 2.8%, driven by increased participation and record-breaking attendance at major sporting events.

Hours worked (18.9%) recorded the largest growth in measured history driven by a strong increase in employment in the Sports & recreation activities subdivision, coinciding with the rise in sporting activity.

Growth in intermediate inputs was mainly driven by Travel and tourist agency services.

Administrative and support services saw the strongest growth in industry KLEMS MFP.

KLEMS MFP rose 3.2%, driven by output growth (3.0%) outpacing the total contribution from inputs (-0.1 ppts) due to the detraction in hours worked.

Gross output growth (3.0%) slowed following a 9.1% rise in 2022-23 due to:

• moderation in demand for recruitment services
• slowdown in demand for cleaning services coinciding with the end of the COVID pandemic.

Hours worked fell 6.2% from the peak level in 2022-23, coinciding with the moderation in demand for services after the COVID pandemic.

Accommodation and food services experienced the second largest fall in KLEMS MFP.

KLEMS MFP fell 1.7% due to a large rise in the use of materials.

Gross output grew 3.8% due to continual demand for accommodation and food services, supported by:

• high tourism activity
• record attendance in sporting and recreational events.

Materials contributed 3.1 ppts to output growth, supported by cheaper input prices of food products amid high slaughter rates in 2023-24.

Services contributed 1.9 ppts to output growth, supported by strengths in:

• non-residential property operating services
• travel and tourist agency services.

Mining recorded the fourth consecutive decline in KLEMS MFP.

KLEMS MFP fell 1.2% due to a slowdown in output growth relative to non-IT capital services.

Output growth more than halved (0.8%) compared to 2022-23 due to:

• weather disruptions to iron ore production
• depletion of older mines.

Non-IT capital services contributed 0.9 ppts to output growth due to significant investment in LNG and iron ore projects.

The contribution from intermediate inputs slowed to 0.6 ppts due to:

• fewer planned maintenance and unexpected outages in LNG facilities
• improvements in operational procedures.

Contributions to output growth are calculated by multiplying the growth in inputs by their respective cost share. Two period average cost shares for each industry are reported in the table below.

Industry cost structures are very diverse varying from industry to industry and over time. In 2023-24, the largest cost shares were observed in the following industries:

• Mining is a capital-intensive industry, with non-IT capital services representing over half (55.6%) of the industry's total input costs. This has eased from the 59.1% cost share in 2022-23.
• Administrative and support services is a labour-intensive industry, with labour services accounting for 57.1% of the industry's total input costs.
• Manufacturing is reliant on materials for production, with materials representing nearly half (47.4%) of total input costs.
• Information, media and telecommunications has the highest services cost shares among market sector industries (55.9%). Electricity, gas, water and waste services also had a high cost share for services (51.4%).

Industries may also undergo structural changes over time, such as responding to changes in the relative prices of inputs, which can cause an industry's cost shares to vary.

Industries with significant changes to cost structure over time include:

• Agriculture, forestry and fishing which saw labour services share fall from 12.4% to 10.3% between 1995-96 to 2023-24, whereas non-IT capital services share increased from 24.2% to 30.2% over the same period. The share of intermediate inputs fell from 63.1% to 59.4%, driven by materials and partly offset by energy. The changes in the cost shares could be linked to the gradual shift towards more capital and energy-intensive farming practices.
• Mining share of non-IT capital services rose from 38.6% to 55.6% between 1995-96 and 2023-24, while the shares of other inputs fell. The rise of the non-IT capital services share reflects the Mining investment boom and elevated commodity prices since the mid 2000’s.
• Information, media and telecommunications share of services rose from 50.1% to 55.9% between 2014-15 to 2023-24, while the capital share fell from 26.2% to 18.4%. These cost share shifts occurred alongside increased outsourcing of cloud-based services.

This publication incorporates revisions as follows:

• Implementation of historical revisions in the national accounts: Impacts from the 2025 Annual National Accounts historical revisions | Australian Bureau of Statistics (abs.gov.au)
• Revisions to Labour Account’s hours worked reflecting methodological refinements and updated source data: Labour Account Australia, September 2025 | Australian Bureau of Statistics (abs.gov.au)

This release previously used catalogue number 5260.0.55.004.

For enquiries about these and related statistics, use the Contact us page. The ABS Privacy Policy outlines how the ABS will handle any personal information that you can provide to us.