Estimates of Industry Level KLEMS Multifactor Productivity methodology

The sum of gross operating surplus and the proportion of gross mixed income that would represent a return on the owner's capital.

Indexes of real output per unit of capital services used in production. Derived by dividing an index of chain volume industry or market sector gross value added by an index of capital services. The capital productivity indexes reflect not only the contribution of capital to changes in production, but also the contribution by labour and other factors affecting production.

Capital services reflect the amount of 'service' each asset provides during a period. For each asset, the services provided in a period are directly proportional to the asset's productive capital value in the period. As an asset ages and its efficiency declines so does the productive capital value and the services the asset provides.

Growth accounting involves decomposing gross output growth into contributions from growth in labour, capital and intermediate inputs and MFP. This framework provides an analytical tool to identify the underlying drivers of growth. ABS MFP statistics are compiled on the basis of the standard growth accounting framework, which is widely adopted by leading statistical agencies and recommended by the OECD. Growth accounting allows us to better understand the contribution of productivity growth to output growth, as well as the other drivers of output growth. In the growth accounting framework, growth in labour productivity can be decomposed into growth in capital deepening (the ratio of capital to labour), growth in labour quality and growth in MFP.

The subgroup of intermediate inputs in KLEMS related to energy. It includes coal, jet fuel, natural gas, liquid petroleum gas, automotive petrol and electricity.

The total value of industry output measured at basic prices. Basic prices valuation of output removes the distortion caused by variations in the incidence of commodity taxes and subsidies across the output of individual industries.

The hours worked by all labour engaged in the production of goods and services, including hours worked by civilian wage and salary earners, employers, self–employed persons, persons working one hour or more without pay in a family business or on a farm, and members of the Australian defence forces.

Consists of the value of the goods and services consumed as inputs by a process of production, excluding the consumption of fixed capital. Also known as intermediate consumption. For the KLEMS growth account, it comprises the energy, materials and services inputs.

A growth accounting framework where the growth in real gross output is described by contributions to growth from real capital services (K), labour services (L), energy (E), materials (M) services (S), and the growth in gross output based multifactor productivity.

The ABS published experimental estimates of industry level KLEMS MFP in March 2016 and removed the experimental label from KLEMS MFP with the release in 2019-20. The term KLEMS represents the five inputs categories - capital (K), labour (L), energy (E), materials (M), and services (S). KLEMS provides, through a more detailed statistical decomposition, more information on the contributions to output growth, and production efficiency. KLEMS also provides a suitable tool for evaluating the effects of changes in the input mix, such as the role of labour hours and composition relative to capital services or intermediate inputs in accounting for industry output growth. For more information refer to Information Paper: Experimental Estimates of Industry Level KLEMS Multifactor Productivity, 2015.

The change in labour services attributable to changes in the education, experience and gender of the workforce over time. When combined with hours worked, it is referred to as the Quality adjusted labour input.

The sum of compensation of employees and the proportion of gross mixed income that would represent a return on the owner's labour.

Labour productivity is defined as a ratio of output to labour input, that is, the amount of output produced for an hour of work. Changes in this ratio can also reflect changes in other factor inputs (such as capital). An increase in labour productivity means that more output is being produced per hour of work.

The Market Sector consists of industries which predominantly produce goods and services which are sold at “market prices”, that is, prices which determine the quantity of goods produced and sold and which over the business cycle cover the cost of production. It includes Agriculture, forestry and fishing, Mining, Manufacturing, Electricity, gas, water and waste services, Construction, Wholesale trade, Retail trade, Accommodation and food services, Transport, postal and warehousing services, Information, media and telecommunication services, Financial and insurance services, Rental, hiring and real estate services, Professional, scientific and technical services, Administrative and support services, Arts and recreation services, and Other services. It excludes Public administration and safety, Education and training, Health care and social assistance and Ownership of dwellings.

The subgroup of intermediate inputs in KLEMS related to materials. Examples include wool, cotton, metal, plastic and wood products.

Indexes of gross value added per combined unit of labour and capital (in the case of GVA based MFP) or indexes of gross output per combined unit of labour, capital and intermediate input (in the case of Gross output or KLEMS multifactor productivity).

This measure of labour input takes account of changes in the aggregate quality of labour due to changes in educational attainment and the length of experience in the workforce. Labour productivity and multifactor productivity estimates based on quality adjusted hours worked are also calculated.

The subgroup of intermediate inputs in KLEMS related to services. Examples include Architectural services, Legal, accounting and management services, Advertising services, Market research services, Internet services, Data processing services, and Telecommunication services (excluding equipment).

Matrices that record how supplies of different kinds of goods and services originate from domestic industries and imports, and how those supplies are allocated between various intermediate or final uses, including exports.