5260.0.55.004 - Experimental Estimates of Industry Level KLEMS Multifactor Productivity, 2017-18 Quality Declaration 
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 02/12/2019   
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Analysis of results

In 2017-18, growth in KLEMS MFP, on a quality adjusted hours worked basis, was recorded in seven of the sixteen market sector industries.

KLEMS Productivity growth by market sector industries, 2017-18, percentage change
KLEMS Productivity growth by Market Sector Industries, 2017-18, percentage change

KLEMS provides a detailed statistical decomposition on the contributions to output growth, represented by five input categories - capital (K), labour (L), energy (E), materials (M), and services (S). This allows for analysis on the 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.

The strongest KLEMS MFP growth was recorded in:

  • Administrative and Support Services (5.2%), where KLEMS MFP was the main contributor to output growth of 3.7%. Total intermediate inputs contributed 0.8 percentage points, mainly from services. Hours worked detracted 2.5 percentage points. This division relies heavily on labour and services, which account for over 95% of the industry's total inputs. This division provides recruitment services to support businesses in the economy. For example, Mining and Construction use these recruitment services extensively to support increased demand for their outputs.
  • Professional, Scientific and Technical Services (2.1%). Output increased 6.2% in 2017-18, recording continued growth since 2003-04. The main contributor to growth was services (3.1 percentage points), with increases in technical, construction and managerial services that support public investment in infrastructure. Labour and service inputs exceed 90% of the total cost shares for this industry.
  • Mining (1.5%). Gross output grew 5.4%, supported mainly by total intermediate inputs contributing 2.8 percentage points with more than half of this representing services (1.6 percentage points). Capital cost shares have surged in recent years to over 45%, exceeding the long run average cost share due to lower labour and intermediate input intensity. This reflects the completion of some large mining projects, facilitating increased output capacity.

The largest decreases in KLEMS MFP were in Agriculture, Forestry and Fishing (-2.1%) and Arts and Recreation Services (-2.4%).

Key figures, By Market Sector Industries, Annual points contribution to growth 2017-18, percentage change (a)

Contribution to Gross Output Growth

Capital
Labour

Intermediate Inputs

Industry
Gross Output Growth
IT
Non-IT
Hours Worked
Composition
Energy
Materials
Services
KLEMS MFP(b)

Agriculture, forestry and fishing
-1.4
0.0
0.1
0.8
0.0
0.2
-0.8
0.4
-2.1
Mining
5.4
0.0
0.7
0.4
0.1
0.4
0.8
1.6
1.5
Manufacturing
2.3
0.0
-0.1
-0.1
0.1
0.1
1.6
0.0
0.6
Electricity, gas, water and waste services
2.2
0.1
0.6
0.8
0.1
0.2
0.6
0.7
-0.9
Construction
8.7
0.0
0.1
1.6
0.1
0.0
2.4
4.8
-0.4
Wholesale trade
2.3
0.0
0.3
0.3
0.3
0.2
0.4
0.9
-0.1
Retail trade
3.1
0.0
0.3
1.5
0.2
0.0
0.2
1.2
-0.3
Accommodation and food services
3.4
0.0
0.1
0.2
0.1
0.0
1.7
0.5
0.8
Transport, postal and warehousing
2.6
0.0
0.5
1.2
0.1
0.3
0.2
1.3
-1.1
Information, media and telecommunications
3.9
0.5
0.8
0.3
0.2
0.0
0.4
0.6
1.1
Financial and insurance services
3.1
0.5
-0.1
-0.6
0.2
0.0
0.1
1.8
1.2
Rental, hiring and real estate services
-0.5
0.1
0.9
-0.1
0.1
-0.1
0.0
-0.5
-0.9
Professional, scientific and technical services
6.2
0.1
0.2
0.1
0.2
0.0
0.4
3.1
2.1
Administrative and support services
3.7
0.1
0.0
-2.5
0.2
0.0
0.2
0.6
5.2
Arts and recreation services
2.1
0.1
0.4
2.8
0.1
0.0
0.9
0.1
-2.4
Other services
1.4
0.1
0.4
0.8
0.3
0.0
0.8
-0.5
-0.4

(a) The reported percentage changes are based on natural log growth x 100.
(b) Gross output based MFP, quality adjusted hours worked basis.

Contributions to output growth are calculated by multiplying the growth in inputs by their respective cost shares. Two period average cost shares for each industry are reported in the table below. For example, in 2017-18, services intermediate input comprised 50.1% of Electricity, Gas, Water and Waste Services current price gross output.

Two period average cost shares, By Market Sector Industries, percent, 2017-18 (a) (b)

Industry
Capital Services-IT
Capital Services Non-IT
Labour Services (c)
Energy
Material
Services

Agriculture, forestry and fishing
0.2
32.5
11.5
5.0
18.4
32.5
Mining
0.2
45.4
11.0
5.6
5.7
32.1
Manufacturing
0.3
9.3
18.5
6.3
45.7
19.9
Electricity, gas, water and waste services
1.1
26.2
12.4
6.0
4.2
50.1
Construction
0.4
8.8
21.5
1.4
21.3
46.6
Wholesale trade
1.5
15.9
44.0
2.8
5.5
41.8
Retail trade
1.3
14.9
44.0
1.9
6.2
31.8
Accommodation and food services
0.3
10.0
37.2
2.8
24.8
24.9
Transport, postal and warehousing
0.7
18.8
25.9
8.3
2.6
43.6
Information, media and telecommunications
3.4
20.1
19.0
1.9
4.5
51.2
Financial and insurance services
5.9
38.0
18.6
0.5
0.4
36.6
Rental, hiring and real estate services
1.2
29.6
19.7
1.9
0.9
46.7
Professional, scientific and technical services
1.5
5.7
44.0
0.7
1.3
46.8
Administrative and support services
0.6
2.3
57.5
0.3
1.6
37.7
Arts and recreation services
0.9
11.5
25.5
0.7
16.0
45.5
Other services
0.9
6.0
44.2
0.6
22.7
24.6

(a) Two periods represent t and t-1.
(b) Percentages may not add to 100% due to rounding.
(c) Combined Hours worked and Composition.

Industry cost structures are very diverse, for example:
  • Manufacturing has the most materials intensive production process, with this input representing nearly half of the industry's total input costs,
  • Electricity, Gas, Water and Waste Services and Information Media and Telecommunications depend heavily on services intermediate inputs, with this input exceeding half of the industry's total input costs, and
  • Mining is very capital intensive, with non-IT capital services representing nearly half of the industry's total input costs.

Industries may also undergo structural change over time, such as, responding to changes in the relative prices of inputs, which can cause industry's cost shares to vary. For example, comparing the sum of the combined inputs (labour and capital to intermediate inputs) indicates that Retail Trade has become less dependent on intermediate inputs, while Wholesale Trade has become more dependent on intermediate inputs. Similar to Wholesale Trade, Agriculture, Forestry and Fishing has also become more dependent on intermediate inputs.

Revisions

This publication incorporates revisions as follows: