5260.0.55.001 - Information paper: Experimental Estimates of Industry Multifactor Productivity, 2007  
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 07/09/2007  First Issue
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Contents >> Retail trade >> Capital inputs

CAPITAL INPUTS

There was strong growth in capital services for Retail trade since the late 1990s (figure 9.2). This increase was driven by the rapid growth in gross fixed capital formation (GFCF) that has occurred since the mid 1990s (figure 9.4). Much of this growth is driven by the growth in computer hardware, which has grown at just over 30% per year for the last decade.

9.4 Retail gross fixed capital formation, Chain volume measure (a)
Graph: 9.4 Retail gross fixed capital formation, Chain volume measure (a)

Figure 9.5 shows the increases in GFCF for each asset in volume terms that occurred between 1985-86 and 2005-06. The chart shows a significant increase in computer hardware GFCF, which relates to the increased use of scanning technology, EFTPOS facilities and computerised inventory management. Over the latter half of the 1990s non-dwelling construction GFCF grew rapidly, which outside of computers and software, was the fastest growing asset.

9.5 Retail gross fixed capital formation by asset, Chain volume measures (a)
Graph: 9.5 Retail gross fixed capital formation by asset, Chain volume measures (a)

While there have been significant changes in GFCF, there have been only minimal changes in the rental price weights of the assets used to construct the industry's capital services estimate (figure 9.6). The large increase in computers' GFCF has led to only a 2% increase in its rental price weight. On the other hand the increase in motor vehicle investment has not translated into an increase in its rental price weight. This is because other assets have grown relatively faster than motor vehicles. Another aspect is the inclusion of land and inventories in estimating the industry's capital services.


Inventories form a significant component of Retail trade's capital services, which is unlike most other industries. The rental price weight for inventories has shown some volatility, but has averaged 16% over the last twenty years (figure 9.6). The productive capital stock of inventories grew by 1.8% per year between 1985-86 and 2005-06, although as figure 9.7 shows, most of this increase occurred over the last ten years.


One other issue in the measurement of capital services relates to deregulation of trading hours. As stores are opening longer hours this means they are obtaining greater capital services from their existing stock of assets compared to previously, that is, there appears to be an increase in capacity utilisation. The current measures for capital services do not account for this. The impact of trading hours on capital services requires further investigation.

9.6 Retail rental price weights (a)
Graph: 9.6 Retail rental price weights (a)

Figure 9.7 shows the growth in the productive capital stock for those assets that have relatively larger rental price weights. The impact of information technology on Retail trade capital services is further reflected in this chart, as there was significant growth in both these assets since the mid 1990s.

9.7 Retail productive capital stock, (2004-05 = 100)
Graph: 9.7 Retail productive capital stock, (2004-05 = 100)



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