Latest release

Estimates of Industry Multifactor Productivity

Updates estimates of multifactor productivity (MFP) for industries and market sector aggregates.

Reference period
2020-21 financial year

COVID-19 impacts on productivity measures

Productivity measures in the ABS are based on the Australian System of National Accounts framework. The treatment of COVID-19 related policies within the national accounts will also impact productivity estimates. For the 2020-21 reference year, the national accounts treatment for the different COVID-19 related policies were documented in the spotlight articles “Classifying COVID-19 policy interventions in macroeconomic statistics” in the  September quarter 2020, December quarter 2020, March quarter 2021 and June quarter 2021.

Two spotlight articles, Productivity measurement in the time of a pandemic and Variations in the Utilisation of Productivity Inputs were released in the 2019-20 issue of ‘Estimates of Industry Multifactor Productivity’. The impacts to productivity measurement from COVID-19 containment measures, policies and government subsidies were discussed in these articles and remain relevant for the current reference year.

Revisions in this issue

This issue of Estimates of Industry Multifactor Productivity, incorporates historical revisions to gross value added, capital services and hours worked that were previously released in the Australian System of National Accounts, 2020-21. Further information about the revisions is detailed in Improved estimates of the annual national accounts: Results of the 2021 historical revisions.

The revisions to hours worked is a result of the implementation of the Australian Labour Account series into the national accounts from 1994-95 onwards. This input series replaces the Labour Force Survey hours worked series, impacting productivity measures throughout the time series. Further information on the implementation of the Australian Labour Account in productivity measurement is available as an article accompanied with this release in Improved estimates of hours worked in Productivity: Implementation of hours worked from the Labour Account .

Analysis of results

On an hours worked basis, market sector MFP rose 0.2% in 2020-21. Market sector gross value added (GVA) rebounded after a fall in the previous year, recording 0.6% growth. By comparison, combined labour and capital inputs grew 0.4%, reflecting capital services growth of 1.4% and a fall in hours worked of 0.5%. Market sector labour productivity grew 1.1% in 2020-21, the result of a rise in GVA and a fall in hours worked.

On a quality adjusted labour input (QALI) basis, MFP fell 0.2% and labour productivity only rose 0.4%. The weaker growth on a QALI basis reflects a positive contribution from changes to the composition of labour due to educational attainment and work experience.

Key figures market sector productivity, 2020-21
 Hours worked basisQuality adjusted hours worked basis
 % change% change
Multifactor Productivity0.2-0.2
Gross Value Added0.60.6
Labour Input-0.50.1
Capital Input1.41.4
Labour Productivity1.10.4

Estimates of industry productivity

In 2020-21, MFP growth was reported in nine market sector industries, while a fall in MFP was experienced in seven industries. The largest increases in MFP were in Agriculture, forestry and fishing (21.7%) and Wholesale trade (3.1%). The largest MFP falls were in Transport, postal and warehousing (7.8%) and Arts and recreation services (5.4%).

a. Natural log growth x 100

Agriculture, forestry and fishing records the largest MFP growth

MFP rose 21.7%, reversing the falls in MFP in the previous two years. This increase in productivity represents the strongest growth for the division since 2003-04 and the strongest growth of all industries in 2020-21. The MFP growth reflects:

  • A rise in GVA of 19.9%, reflecting easing drought conditions and more favourable weather. The industry strength was largely driven by the Agriculture subdivision, with Grains and Other Crops recording strong growth due to bumper grain harvests.
  • Combined inputs fell 1.8%, driven by a fall of 6.1% in hours worked and a marginal increase in capital services (0.1%). The fall in hours worked was due to COVID-19 related border closures restricting the inflow of agricultural workers.
  • Labour productivity recorded a 26.0% growth due to a strong rise in GVA coupled with a fall in hours worked.

a. Natural log growth x 100

Mining records first decline in MFP since 2012-13

Mining MFP fell 3.3%, recording the first MFP decline since 2012-13. The fall in Mining productivity reflects:

  • GVA fell 2.3% due to weakness across most of the industry’s subdivisions. The greatest fall was seen in the Coal Mining subdivision due to weak global demand for coal. The fall in GVA was partially offset by a rise in Iron Ore Mining reflecting increased export demand.
  • Combined inputs recorded moderate growth of 1.0%, driven by subdued capital service growth (0.9%) and a 1.8% rise in hours worked.
  • Labour productivity declined 4.1%, reversing the growth of the previous two years.

a. Natural log growth x 100

Solid MFP growth in Wholesale trade driven by strength in GVA

MFP recorded a 3.1% rise, the second largest MFP growth of all industries in 2020-21. The rise was driven by:

  • Solid growth in GVA of 6.6%, representing the largest rise since 1997-98. The rise in GVA was supported by a large increase in demand for Motor Vehicle and Motor Vehicle Parts for new passenger and industrial vehicles. The strength in GVA also came from increased demand for computer hardware, farm, and construction equipment, which saw a significant rise in Machinery and Equipment Wholesaling. Basic Material Wholesaling rose, reflecting positive downstream impacts from the agricultural industry.
  • Combined inputs rose 3.5%, reflecting a strong rise in hours worked (3.9%) and an increase in capital services (2.9%). A larger rise in GVA compared to hours worked translated to a 2.7% rise in labour productivity.

a. Natural log growth x 100

Transport, postal and warehousing records the largest decline in MFP

MFP recorded a 7.8% decline, representing the largest fall of all industries in 2020-21. This was driven by:

  • GVA which fell 8.7%, representing the division’s largest fall on record. This reflects a significant fall in Air and Space Transport due to COVID-19 related border closures. The fall was partially offset by high demand for Postal and Courier Pick-up and Delivery Services and Road Transport due to online retailing and increased freight services respectively.
  • Combined inputs fell 0.8%, reflecting a decline of 3.0% in hours worked and an increase in capital services of 2.6%. A larger decline in GVA than in hours worked resulted in a 5.7% contraction in labour productivity.

a. Natural log growth x 100

Financial and insurance services records a small MFP growth

MFP recorded a 0.4% rise, representing the highest growth since 2016-17. This was driven by:

  • GVA which rose 1.7%, reflecting an increase in demand for Finance services for dwelling loans amid increased housing market activity. Demand for Insurance and Superannuation Funds increased, as employer and personal contributions rose.
  • Combined inputs rose 1.3%, driven by strength in hours worked (4.0%) and a marginal fall in capital services of 0.1%.

The Finance and insurance services industry was subject to large revisions as part of the 2021 historical revisions. The revisions impacted both GVA and hours worked, hence resulted in revisions in Financial and insurance services MFP. For more information on the historical revisions see Improved estimates of the annual national accounts: Results of the 2021 historical revisions.

a. Natural log growth x 100

Productivity growth cycles

Growth cycle analysis can minimise the effects of some temporary influences (such as variations in capital utilisation) by averaging productivity measures over a cycle. For more information about the productivity growth cycle, please see the Feature Article: Experimental Estimates of Industry Value Added Growth Cycles in the 2015–16 issue of Estimates of Industry Multifactor Productivity.

The 2021 historical revisions resulted in revisions to market sector MFP. The majority of market sector productivity growth cycles remained robust to the MFP revisions, with three of the four productivity peaks (in 1998-99; 2003-04; and 2017-18) remaining unchanged. A new productivity peak in 2009-10 was identified, which replaced the weakened peak in 2011-12.

Relative to earlier growth cycles, GVA growth in the latest cycle (2009-10 to 2017-18) was more subdued, averaging 2.8% in annual growth. MFP contributed an average of 0.7 percentage points (ppts) to GVA growth per year for the latest growth cycle. This shows an increase in MFP contribution from the previous cycle (2003–04 to 2009-10), in which MFP detracted 0.2 ppts from market sector GVA growth. Capital services remains the largest contributor, contributing 1.5 ppts to GVA growth in the latest cycle, compared to 2.2 ppts in the previous cycle.

The 2021 historical revisions also resulted in revisions in productivity peaks for a number of industries. For more information on the impact of hours worked revisions to industry growth cycle peaks, see Improved estimates of hours worked in Productivity: Implementation of hours worked from the Labour Account.

Contribution to output growth, by growth cycle, average percentage points
  Growth cycles 
 1998-99 to 2003-042003-04 to 2009-102009-10 to 2017-18
Output (GVA) growth (a)3.63.02.8
Contribution to output growth
(hours worked basis)
   
Capital services1.72.21.5
Hours worked0.91.00.6
Multifactor productivity1.0-0.20.7

a. Natural log growth x 100

Experimental productivity measures - Direct Aggregation Across Industries (DAAI) approach

Experimental productivity measures (Tables 20-23) present the estimated industry contributions to market sector labour productivity growth under an alternative decomposition framework, the direct aggregation across industries (DAAI) approach (see Experimental productivity growth accounts). This approach enables the separation of direct productivity and hour reallocation effects. In addition, it allows tracking industry origins of the market sector’s labour productivity growth.

Contribution to market sector LP growth – by industry, 2020-21, percentage points
 Direct productivityHour reallocation
Agriculture, forestry and fishing0.80.1
Mining-0.60.2
Manufacturing0.20.0
Electricity, gas, water and waste services-0.20.1
Construction0.20.1
Wholesale trade0.20.0
Retail trade0.2-0.1
Accommodation and food services0.00.0
Transport, postal and warehousing-0.40.0
Information, media and telecommunications-0.10.1
Financial and insurance services-0.30.2
Rental, hiring and real estate services0.00.0
Professional, scientific and technical services0.30.0
Administrative and support services-0.20.1
Arts and recreation services-0.10.0
Other services0.10.1
Total contribution0.10.9

The direct productivity effect is measured as the sum of direct labour productivity industry contributions. In 2020-21, the direct productivity effect contributed 0.1 ppts to the market sector’s labour productivity growth. The largest contributors to aggregate labour productivity growth were Agriculture, forestry and fishing, Professional, scientific and technical services. The largest detractors from aggregate labour productivity growth were Mining and Transport, postal and warehousing, reflecting declines in labour productivity in these industries.

The hour reallocation effect captures compositional changes to hours worked across industries. In 2020-21, the reallocation effect was the key contributor (0.9 ppts) to market sector LP growth. Industries with high level of labour productivity such as Mining and Financial and insurance services saw an increase in the hours worked in 2020-21. The reallocation of hours worked towards these highly productive industries contributed positively to the market sector labour productivity growth. 

Experimental state productivity estimates

Experimental estimates of market sector aggregates for state and territory are in Tables 27 to 42. For more information on State productivity estimates see Feature Article: Experimental Estimates of State Productivity.

In 2020-21, labour productivity and MFP results were mixed across the states and territories:

  • Negative MFP growth was experienced in the large states of New South Wales, Victoria, Queensland along with MFP declines in Tasmania and the Northern Territory. South Australia recorded the strongest MFP growth (2.6%). High MFP growth was attributable to strong rise in the market sector GVA in South Australia, driven by strength in Agriculture, forestry and fishing, Manufacturing and Wholesale trade.
  • Most states and territories experienced positive growth in labour productivity excluding Queensland and Tasmania. South Australia recorded the strongest labour productivity growth (3.2%) for the year, while Tasmania saw the largest fall (3.6%). 

    MFP growth 2020-21, percentage change (a)

    Mutifactor Productivity Growth New South Wales (NSW) : -0.3% Victoria (VIC): -0.2% Queensland (QLD): -0.5% South Australia (SA): 2.6% Western Australia (WA): 1.3% Tasmania (TAS): -0.6% Northern Territory (NT): -0.1% Australian Capital Territory (ACT): 0.5%

    MFP growth 2020-21, percentage change (a)

    New South Wales (NSW) : -0.3%
    Victoria (VIC): -0.2%
    Queensland (QLD): -0.5%
    South Australia (SA): 2.6%
    Western Australia (WA): 1.3%
    Tasmania (TAS): -0.6%
    Northern Territory (NT): -0.1%
    Australian Capital Territory (ACT): 0.5%

    a. Natural log growth x 100

      Labour productivity growth 2020-21, percentage change (a)

      a. Natural log growth x 100

      Labour productivity growth 2020-21, percentage change (a)

      Labour Productivity Growth

      New South Wales (NSW) : 0.3%
      Victoria (VIC): 2.2%
      Queensland (QLD): -0.9%
      South Australia (SA): 3.2%
      Western Australia (WA): 2.9%
      Tasmania (TAS): -3.6%
      Northern Territory (NT): 3.2%
      Australian Capital Territory (ACT): 0.7%

      a. Natural log growth x 100

      New South Wales – records the third year of contraction in MFP

      • New South Wales market sector MFP contracted for the third consecutive year in 2020-21, falling 0.3%. GVA output rebounded, growing 0.4% due to the easing of the COVID-19 restrictions that drove declines in output in 2019-20.
      • Capital services recorded solid growth of 1.5% in 2020-21, while hours worked recovered, rising 0.2% compared to a fall of 3.0% in the previous year. Strong growth in inputs, particularly capital services, outstripped the growth in GVA resulting in negative MFP growth in 2020-21.

      Victoria - MFP falls in 2020-21

      • Victoria MFP fell 0.2% in 2020-21 after flat growth in the previous two years. GVA output fell for the second consecutive year as a result of the negative impact of COVID-19 restrictions and lockdowns on economic activity.
      • Inputs experienced mixed results with hours worked declining 3.7% but capital services growing 2.2%. Despite hours worked falling faster than GVA, the growth in capital services caused MFP growth to fall as a result.

      Queensland – MFP contracts for third consecutive year

      • Market sector MFP in Queensland shrunk 0.5% in 2020-21 after declines in the previous two years. GVA output rebounded, increasing 1.0% after two consecutive years of declines.
      • Hours worked rose 1.9%, recording only the second year of growth in seven years while capital services grew for the twenty-sixth consecutive year, increasing by 1.0% in 2020-21.

      South Australia – Records strongest MFP growth of all states and territories in 2020-21

      • In 2020-21, South Australia led the states in market sector MFP, rising 2.6%, its strongest growth in over two decades. GVA also recovered after declines in the previous year, rising 4.1%, the largest increase since 2007-08. Recovery was evident as the state moved out of COVID-19 related restrictions and containment measures, while a bumper crop harvest in Agriculture also strongly contributed to the rise.
      • GVA growth outpaced growth in both inputs, with hours worked rising 0.9% while capital services rose 2.1%. This resulted in the strong growth in MFP in 2020-21.

      Western Australia – Continues MFP growth in 2020-21

      • Western Australia recorded its fourth consecutive year of growth in MFP, rising 1.3% in 2020-21. Annual MFP growth in Western Australia has averaged 0.7% over the last decade.
      • Market sector GVA grew 1.8%, attributed to continued Iron Ore Mining activity driven by strong overseas demand.
      • Capital services increased 1.4%, easing some of the growth in MFP after hours worked declined 1.1% for the sixth time in the last decade.

      Tasmania – MFP falls in 2020-21

      • Market sector MFP fell 0.6% in 2020-21, after experiencing solid growth in the three previous years. Tasmania recorded sizeable growth in GVA of 4.8%, the highest of all states and territories, and the largest increase since 2007-08. The rise in GVA was supported by strength in Agriculture, forestry and fishing, Wholesale trade and Manufacturing. 
      • Combined inputs of hours worked and capital services also rose sharply, up 8.3% and 2.1% respectively. The growth in inputs outpaced the rise in GVA, resulting in MFP falling in 2020-21.

      Northern Territory – Records a small fall in MFP in 2020-21

      • MFP declined 0.1% in 2020-21 after record growth of 11.9% in 2019-20. GVA contracted 2.7% in contrast to the previous year where it grew 8.2%, the strongest growth since 2012-13. The fall in GVA reflects weakness in Mining, driven by Oil and Gas Extraction where production volumes reduced in response to falling commodity price.
      • Hours worked declined in the Northern Territory, for the fourth consecutive year, falling 5.9% while capital services fell 0.3%.

      Australian Capital Territory – Records eight consecutive years of MFP growth in 2020-21

      • Market sector MFP grew 0.5% for ACT in 2020-21, the weakest growth in the last eight years. GVA grew 2.3%, lower than the average annual growth of 3.3% in the last decade.
      • Capital services continued to grow, rising 2.2% in 2020-21, while hours worked rose 1.6% after falling in the previous two years.

      For more information on experimental estimates of state and territory productivity (Tables 27 to 42), see Feature Article: Experimental Estimates of State Productivity.

      Frequently asked questions

      Q. What is productivity?

      A. Productivity is broadly defined as the ratio of a volume measure of output to a volume measure of input; that is, output per unit of input. Productivity can be defined for an individual entity, an industry, sector, or the economy as a whole. Growth in productivity can occur from an increase in output, a decrease in inputs or a combination of both. Productivity growth is the gap between output growth that is not accounted for by growth in inputs.

      Q. What is labour productivity?

      A. 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.

      Q. What is capital productivity and capital deepening?

      A. Capital productivity is defined as a ratio of output to capital input; that is, output per unit of capital. Changes in this ratio can also reflect technological changes, and changes in other factor inputs (such as labour).

      Capital deepening refers to changes in the capital to labour ratio. Increased capital deepening means that, on average, each unit of labour has more capital to work with to produce output, so is an indicator of ability to augment labour. Labour saving practices, such as automation of production, will result in increased capital deepening, which is often associated with a decline in capital productivity. Growth in capital deepening is an important driver (alongside MFP) of labour productivity growth. It may not be very useful to interpret declines in capital productivity in isolation since declines in capital productivity can be more than offset by gains in labour productivity (resulting in MFP growth).

      Q. What is multifactor productivity?

      A. Multifactor productivity (MFP) is defined as a ratio of a measure of output to a combined input of labour and capital. In empirical analysis, it is expressed in terms of growth rate, that is, growth rate of output minus the growth rate of inputs. At the aggregate and industry level, gross value added-based MFP is defined as the ratio of gross value added to the combined inputs of capital and labour. At an industry level, gross output-based MFP is also measured as the ratio of gross output to the combined inputs of capital, labour, and intermediate inputs.

      Q. What measures are available?

      A. The ABS has been producing MFP statistics since 1985. There are different measures of productivity and the choice between them usually depends on the purpose of use and the availability of data. Broadly, productivity measures can be either partial productivity measures, which relate a measure of output to a single measure of input, or multifactor productivity measures, which relate a measure of output to a combination of inputs.

      The ABS produces annual indexes of labour, capital and multifactor productivity for the market sector as well as for each industry division within the market sector.

      MeasurePublication
      Annual productivity measures for the market sectorAustralian System of National Accounts (cat. no. 5204.0)
      Annual industry level gross value added-based MFP indexesEstimates of Industry Multifactor Productivity (cat. no. 5260.0.55.002)
      Annual industry level gross output-based MFP indexesEstimates of Industry Level KLEMS Multifactor Productivity (cat. no. 5260.0.55.004)
      Quarterly estimates of labour productivity (i.e. GDP per hour worked) for the market sector and for the whole economyAustralian National Accounts: National Income, Expenditure and Product (cat. no. 5206.0)
      Quarterly and annual GDP per capitaAustralian National Accounts: National Income, Expenditure and Product (cat. no. 5206.0)

      Q. What are the different measures of labour input?

      A. The three common methods of measuring labour input are number of employed persons, hours worked and quality adjusted hours worked. The ABS publishes productivity statistics on both an hours worked basis and quality adjusted hours worked basis. These statistics are derived from estimates of hours actually worked, obtained from the Labour Account from 1994-95 onwards. Indexes of hours worked are preferred to employment numbers because hours worked captures changes in overtime, standard weekly hours, leave, and part-time work. Quality adjusted hours worked further captures changes in the education and experience of the workforce.

      A quality adjusted labour input (QALI) measures both changes in hours worked and changes in quality (that is, changes in educational achievement and experience). Aggregate QALI indexes have grown faster than the corresponding unadjusted hours worked indexes, implying that labour quality has been increasing. Assuming that higher wages reflect a higher marginal product of labour, labour quality will increase when the high wage rate groups of workers increase their hours worked faster than the low wage rate groups. Aggregate QALI indexes for the market sector and twelve selected industries are compiled using Australian Census data. Inter-census periods are interpolated so care should be taken interpreting year on year changes in labour composition.

      Q. What is KLEMS?

      A. 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 see Estimates of Industry Level KLEMS Multifactor Productivity (cat. no. 5260.0.55.003 and cat. no. 5260.0.55.004).

      Q. Are productivity statistics revised?

      A. Yes. Revisions are an inevitable consequence of the compilation process, reflecting both the complexity of economic measurement and the need to provide economic policy advisers and other users with initial estimates that are timely in order to maximise their use in analysis of current economic conditions. Revisions arise from the progressive incorporation of more up to date data, re-weighting of chain volume series and from time-to-time the introduction of new economic concepts, data analysis and improved data sources and methods.

      Q. What is a growth cycle?

      A. A useful method of examining changes in productivity over an extended period involves identifying and dividing the data into productivity growth cycles. Productivity growth cycle peaks are determined by comparing the annual MFP estimates with their corresponding long-term trend estimates. The peak deviations between these two series are the primary indicators of a growth cycle peak, although general economic conditions at the time are also considered. The purpose is to minimise the effects of cyclical factors that may cause the year-to-year changes in MFP to deviate from its conceptual definition. In this way, most of the effects of variations in capacity utilisation and much of the random error are removed. By averaging between peaks, it is assumed that these peaks represent similar levels of capacity utilisation, allowing more like-for-like comparisons of MFP between different growth cycles.

      Q. What industries are covered?

      A. Ideally, MFP measures should cover all economic activities, but this is only possible if all of the necessary data are available. The market sector comprises sixteen industries under the Australian and New Zealand Standard Industrial Classification, 2006 (ANZSIC06); that is, from ANZSIC06 Divisions A to N, plus Divisions R and S. The detailed industries included in the market sector are as follows:

      ANZSIC
      DivisionIndustry
      AAgriculture, Forestry and Fishing
      BMining
      CManufacturing
      DElectricity, Gas, Water and Waste Services
      EConstruction
      FWholesale Trade
      GRetail Trade
      HAccommodation and Food Services
      ITransport, Postal and Warehousing
      JInformation, Media and Telecommunications
      KFinancial and Insurance Services
      LRental, Hiring and Real Estate Services
      MProfessional, Scientific and Technical Services
      NAdministrative and Support Services
      RArts and Recreation
      SOther Services

      Until 2009-10, the market sector consisted of twelve industries (Divisions A to K and P of Australian and New Zealand Standard Industrial Classification 1993). The current market sector definition improves relevance in two key respects: it reflects the growing contribution of services industries in the economy; and improves economic coverage. The current estimates are not directly comparable to those published prior to the adoption of ANZSIC06 due to significant changes in coverage.

      Q. Why do some industries not have productivity statistics?

      A. While measures of labour productivity are published for the non-market sector (cat. no. 5206.0), non-market industries (ie. Divisions O, P and Q) are currently excluded from ABS MFP productivity estimates. The industries included in the non-market sector are:

      ANZSIC
      DivisionIndustry
      OPublic Administration and Safety
      PEducation and Training
      QHealth Care and Social Assistance

      Non-market industries are those industries in which the majority of output is provided free of charge or at prices which are not economically significant (in that there is only a weak relationship between price and the supply and demand for the good or service). Output measures for the non-market industries are typically derived using input costs and so by definition there is no productivity growth. Ownership of dwellings is also excluded from the market sector because no employment is associated with it.

      Q. What is growth accounting?

      A. 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.

      Interpreting productivity results

      Q. How is productivity data used?

      A. Productivity statistics are useful performance indicators for the formulation and evaluation of policies involving long-term growth, efficiency and competitiveness. Labour productivity is widely used for making historical, inter-industry and inter-country growth comparisons. Furthermore, labour productivity is often regarded as an indicator of improvements in living standards as growth in labour productivity has a close long term relationship with growth in labour earnings.

      How do I interpret productivity results?

      A. The interpretation of productivity indexes depends on how output and inputs are measured. Ideally, the output indexes will measure all output produced from the input which is measured by the input indexes. Caution is required when interpreting productivity statistics due to the various inputs and output measurement issues and the complexity of the production processes. The ABS measures of productivity growth reflect a mix of factors, including:

      • technical change;
      • changes in processes, structures, knowledge or management practices;
      • reallocation of inputs between firms and industries;
      • changes in capacity utilisation or economies of scale;
      • investment and natural resources;
      • government policies and external shocks such as weather conditions and;
      • measurement error and revisions.


      In practice, both output and inputs can be difficult to measure and, because productivity is estimated as a residual, the timing of output and input affects productivity indexes. For example, when production takes longer than a year, inputs will be measured before the corresponding output leading to a decline in measured productivity. For the Australian economy, examining MFP movements over growth cycles is a common approach for interpreting productivity performance over time, due to the short-term volatility of annual estimates.

      Q. What are some limitations of productivity analysis?

      A. Productivity estimates are subject to limitations in measurement, as not all inputs and outputs to a production process can be measured accurately. This may be due to inherent measurement difficulties, or because including that input or output is out of scope of the analysis. In either case, changes in an unmeasured input or output will affect productivity measurement and how it is interpreted. Examples of difficult to measure and usually unmeasured inputs include the weather, water, natural resources, intangibles such as organisational and social capital, and public capital, such as government provided infrastructure. They can have a significant bearing on how inputs are transformed into outputs, but are outside the current scope of ABS models.

      Q. How can I get more information on productivity?

      A. Free access to all published productivity data is available on the ABS website (https://www.abs.gov.au). If you require more detailed information, or would like to speak to someone about productivity estimates, please email productivity.statistics@abs.gov.au.

      We also recommend the following products for further information:

      Australian System of National Accounts (cat. no. 5204.0)

      Information Paper: Experimental Estimates of Industry Level KLEMS Multifactor Productivity (cat. no. 5260.0.55.003)

      Estimates of Industry Level KLEMS Multifactor Productivity (cat. no. 5260.0.55.004)

      Australian System of National Accounts: Concepts, Sources and Methods (cat. no. 5216.0)

      Information paper: Experimental Estimates of Industry Multifactor Productivity (cat. no. 5260.0.55.001)

      Research Paper: Estimating Industry-Level Multifactor Productivity for the Market-Sector Industries in Australia (cat. no. 1351.0.55.004).

      Data downloads

      Tables 1 to 19: Estimates of industry multifactor productivity

      Tables 20 to 26: Experimental estimates of industry multifactor productivity

      Tables 27 to 42: Experimental estimates of state productivity