Estimates of Industry Multifactor Productivity

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

Reference period
2021-22 financial year

Key statistics

In 2021-22, on an hours worked basis:

  • The market sector MFP grew 2.2%
  • Market sector labour productivity rose 1.4%
  • Thirteen of sixteen market sector industries experienced a growth in MFP
  • The largest MFP rise was in Agriculture, forestry and fishing, while the largest fall was in Mining

In this release

This edition of Estimates of Industry Multifactor Productivity includes the following articles:

Some productivity estimates presented in this release differ from the ones published in the Australian National Accounts released on October 28, 2022 due to the incorporation of updated hours worked information from the Labour Account Australia. Updated annual data from the Labour Account Australia was released on 9 November 2022.

The COVID-19 pandemic has continued to pose challenges for productivity measurement. For further information about these challenges, see the following articles released in the 2019-20 issue of ‘Estimates of Industry Multifactor Productivity’:

Market sector productivity

On an hours worked basis, market sector MFP rose 2.2% in 2021-22. This marks the largest MFP growth for the market sector since 2001-02.

Market sector gross value added (GVA) experienced a large rise, recording 4.6% growth. By comparison, combined labour and capital inputs grew 2.4%, reflecting capital services growth of 1.5% and a 3.1% rise in hours worked. Market sector labour productivity grew 1.4% in 2021-22, the result of a stronger rise in GVA than in hours worked.

On a quality adjusted labour input (QALI) basis, MFP rose 1.9% and labour productivity rose 0.9%. The weaker growth on a QALI basis reflects a positive contribution from changes in the composition of labour due to educational attainment and work experience. For more details on the QALI measure, see Understanding labour quality and its contribution to productivity measurement.

Growth for market sector (%), 2021-22
 Hours worked basisQuality adjusted hours worked basis
Multifactor Productivity2.21.9
Gross Value Added4.64.6
Labour Input3.13.7
Capital Input1.51.5
Labour Productivity1.40.9

Estimates of industry productivity

In 2021-22, thirteen market sector industries reported a growth in MFP, while three industries experienced a fall. The largest MFP increases were in Agriculture, forestry and fishing (19.2%), Information, media and telecommunications (7.3%) and Transport, postal and warehousing (6.1%). The largest MFP fall was in Mining (2.8%).

a. Natural log growth x 100

Agriculture, forestry and fishing records the largest MFP growth

MFP rose 19.2% in 2021-22, representing the strongest MFP gain among market sector industries. The large rise in MFP reflects:

  • A strong growth in GVA of 21.0%, the highest rise since 2003-04 resulting from another bumper grain harvest.
  • The rise in GVA was underpinned by strength in the Agriculture subdivision due to favourable weather. Despite flooding in parts of NSW and QLD affecting vegetable, nuts, and fruit production, the adverse impact was largely localised.
  • Combined inputs rose 1.8%, driven by a strong rise in hours worked (8.3%) and a small fall in capital services (0.4%).
  • The easing of COVID-19 related restrictions and the opening of international borders facilitated strength in the industry hours worked.

a. Natural log growth x 100

Large MFP rise in Information, media and telecommunications driven by strength in GVA

MFP rose 7.3%, the second largest MFP growth of all industries in 2021-22. The rise was driven by:

  • GVA grew 7.6%, supported by the completion of telecommunications infrastructure, increased industry output following the easing of COVID-19 restrictions and to cater for remote working arrangements.
  • Combined inputs rose marginally (0.3%), reflecting a 1.8% rise in capital services and a 1.6% fall in hours worked.
  • A solid rise in GVA and a fall in hours worked translated to a 9.2% increase in labour productivity.

a. Natural log growth x 100

Transport, postal and warehousing records a solid gain in MFP, reversing declining trend from previous years

MFP posted a 6.1% growth, marking the first rise in productivity recorded for the division since 2016-17. This was driven by:

  • GVA experienced a strong rise of 8.9%, reversing the COVID-19 induced output falls in the previous two years.
  • GVA strength reflected growth across all subdivisions due to increased travel and freight services underpinned by strong online sales and a bumper grain harvest.
  • Combined inputs grew 2.8%, reflecting a 2.8% increase in hours worked and a 2.9% rise in capital services.
  • Hours worked grew softer than GVA, reflecting the impact of increased patronage across all forms of transport in 2021-22 on industry output.

a. Natural log growth x 100

Mining records the largest industry MFP fall in 2021-22

Mining MFP fell 2.8% in 2021-22, falling for the second consecutive year. The fall was driven by:

  • GVA declined 1.3% as a result of reduced production across several mining commodities. Adverse weather, COVID-19 related absenteeism and large-scale maintenance activities contributed to the weakness in output.
  • Hours worked recorded a 3.8% rise, underpinned by strength in employment in Exploration and mining support services and Metal ore mining.
  • Labour productivity fell 5.1%, the largest fall among the market sector industries, resulting from a decline in GVA and a rise in hours worked.

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.

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.

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

a. Natural log growth x 100

Direct Aggregation Across Industries (DAAI)

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 tracing industry origins of the market sector’s labour productivity growth.

Contribution to market sector labour productivity growth (a) – by industry, 2021-22, percentage points
 Direct productivityHour reallocation
Agriculture, forestry and fishing0.5-0.1
Electricity, gas, water and waste services0.10.0
Wholesale trade0.50.1
Retail trade0.0-0.1
Accommodation and food services0.00.1
Transport, postal and warehousing0.40.0
Information, media and telecommunications0.30.0
Financial and insurance services0.20.0
Rental, hiring and real estate services0.10.0
Professional, scientific and technical services0.4-0.1
Administrative and support services0.2-0.2
Arts and recreation services0.10.0
Other services0.0-0.2
Total contribution1.5-0.1

 a. Natural log growth x 100

The direct productivity effect is measured as the sum of direct labour productivity industry contributions. In 2021-22, the direct productivity effect was the sole contributor (1.5 ppts) to the market sector labour productivity growth. In addition, the largest industry contributors to aggregate labour productivity growth were from Agriculture, forestry and fishing and Wholesale trade. The largest detractors from aggregate labour productivity growth were Mining and Manufacturing, reflecting declines in labour productivity in these industries.

The hour reallocation effect captures compositional changes to hours worked across industries. In 2021-22, contribution from the reallocation effect to market sector labour productivity growth was relatively small (-0.1 ppts). This is in contrast with its role in raising market sector labour productivity in 2019-20 and 2020-21 (Table 22 of Data downloads). In 2021-22, industries with relatively lower levels of labour productivity such as Other services and Administrative and support services saw large increases in hours worked. The reallocation of hours worked towards these industries detracted from 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 2021-22, all states except Western Australia recorded positive MFP growth. Significant rebounds were seen in Accommodation and food services and Transport, postal and warehousing. Bumper harvests in Agriculture, forestry and fishing also contributed significantly to market sector output and MFP growth. The small decline in MFP in Western Australia in 2021-22 follows four consecutive years of MFP growth to 2020-21.

The easing of pandemic related restrictions saw strength in the growth in labour services relative to capital services growth. Due to this, capital services per hour worked declined in all states except New South Wales and ACT. This is also known as capital shallowing and is to some extent, an artifact of the lower utilisation of capital during the pandemic not being captured due to measurement challenges.  For a more detailed discussion, see Variations in the Utilisation of Productivity Inputs.

MFP growth 2021-22, percentage change (a)

Multi-factor Productivity by State

MFP growth 2021-22, percentage change (a)

New South Wales (NSW) : 2.2% Victoria (VIC): 2.4% Queensland (QLD): 4.0% South Australia (SA): 3.7% Western Australia (WA): -0.6% Tasmania (TAS): 2.1% Northern Territory (NT): 5.5% Australian Capital Territory (ACT): 5.3%

a. Natural log growth x 100

Labour productivity growth 2021-22, percentage change (a)

Labour Productivity by State

Labour productivity growth 2021-22, percentage change (a)

Labour Productivity Growth New South Wales (NSW) : 3.2% Victoria (VIC): 1.2% Queensland (QLD): 2.9% South Australia (SA): 2.5% Western Australia (WA): -4.6% Tasmania (TAS): -0.1% Northern Territory (NT): 4.5% Australian Capital Territory (ACT): 7.1%

a. Natural log growth x 100

New South Wales – productivity strengthens over the last two years

  • Market sector MFP of 2.2% was the main contributor to GVA growth of 2.4% in 2021-22. Labour services growth contracted in most industries, reflecting COVID-19 restrictions earlier in the year, as well as adverse weather conditions.
  • The output result reflected strong GVA, particularly in Agriculture, forestry and fishing, Information, media and telecommunications and Professional, technical and scientific services. 
  1. Natural log growth x 100

Victoria - records a 2.4% growth in MFP

  • Victoria’s market sector output rebounded 6.8% in 2021-22, following two years of negative growth. The recovery reflected an easing of COVID-19 restrictions, supporting strong rebounds in GVA growth, particularly in Transport, postal and warehousing, Accommodation and food services and Arts and recreation services. More favourable conditions in Agriculture saw a strong GVA growth following subdued growth in the previous two years.
  • Combined inputs contributed 4.4 ppts to the 6.8% GVA growth, and MFP contributed 2.4%. The majority of the growth in combined inputs was due to hours worked (contributing to nearly half of output growth).
  1. Natural log growth x 100

Queensland – MFP grows 4.0%

  • Market sector MFP in Queensland grew 4.0%, the largest growth since 2001-02. The strong result is due to a 6.2% growth in market sector output, with strong GVA growth recorded in Agriculture, forestry and fishing. Favourable weather conditions supported the second highest agricultural production on record, particularly livestock products, cotton and grains. Services industries such as Administrative and support services and Professional, scientific and technical services also recorded strong GVA growth in 2021-22.
  • Of the inputs, hours worked growth of 3.4% outpaced capital services growth of 0.8%.
  1. Natural log growth x 100

South Australia – GVA rebounds strongly

  • GVA grew 6.7% in 2021-22, the strongest growth recorded in this state since the beginning of the timeseries. MFP grew 3.7% and was the strongest contributor to GVA growth.
  • Ten of the sixteen market sector industries contributed to the strong MFP result with the strongest growth experienced in Agriculture, forestry and fishing, supported by bumper grain harvests. Administrative and support services also grew strongly.
  • Hours worked grew 4.2%, particularly strong in Rental, hiring and real estate services and Construction, reflecting strength in construction activity.
  1. Natural log growth x 100

Western Australia – MFP declines 0.6%

  • Western Australia recorded a small decline in MFP in 2021-22, following four consecutive years of MFP growth. The decline reflected record growth in hours worked (7.6%) outpacing more modest growth in GVA (3.1%) which was driven by Manufacturing and Agriculture, forestry and fishing.
  • Most market sector industries recorded increases in hours worked, particularly Information, Media and telecommunications, Arts and recreation, Retail trade and Construction.
  1. Natural log growth x 100

Tasmania – MFP grows 2.1%

  • Market sector GVA grew 5.8% in 2021-22. Favourable harvesting conditions bolstered Agriculture, forestry and fishing GVA and the easing of pandemic restrictions saw considerable strength in the output across the services industries.
  • Hours worked contributed 3.1 ppts to the GVA growth while capital services contributed 0.6 ppts.  Labour productivity contracted slightly, due to the strength in hours worked growth of 5.9% outpacing output growth.
  1. Natural log growth x 100

Northern Territory – output rebounds 6.6%

  • GVA grew 6.6% in 2021-22 rebounding from the 4.1% fall in the previous year. MFP was the largest contributor to GVA growth, growing a solid 5.5%.
  • The Mining industry contributed significantly to the strength in GVA and MFP, driven by oil and gas production.
  1. Natural log growth x 100

Australian Capital Territory – Strong labour productivity growth of 7.1%

  • Market sector labour productivity grew 7.1%, the strongest result recorded for all states and territories in 2021-22. While GVA grew 3.5%, hours worked declined 3.5%, reinforcing the strong labour productivity result. Professional, scientific and technical services was a significant contributor, mainly due to computer design services (cyber, cloud and IT services) and construction activity.
  • Market sector MFP growth was similarly strong at 5.3%, the second highest result among states in 2021-22.
  1. Natural log growth x 100

Revisions in this issue

This publication incorporates revisions as follows:

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.

Table title
Annual productivity measures for the market sectorAustralian System of National Accounts
Annual industry level gross value added-based MFP indexesEstimates of Industry Multifactor Productivity
Experimental - Annual state level gross value added-based MFP indexesEstimates of Industry Multifactor Productivity
Experimental - Annual industry level gross output-based growth accounting measures of labour productivityEstimates of Industry Multifactor Productivity
Annual industry level gross output-based MFP indexesEstimates of Industry Level KLEMS Multifactor Productivity
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
Quarterly and annual GDP per capitaAustralian National Accounts: National Income, Expenditure and Product


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?

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 and Information Paper: Experimental Estimates of Industry Level KLEMS Multifactor Productivity, 2015.

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:

AAgriculture, Forestry and Fishing
DElectricity, Gas, Water and Waste Services
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 (see Australian National Accounts: National Income, Expenditure and Product), non-market industries (i.e. Divisions O, P and Q) are currently excluded from ABS MFP productivity estimates. The industries included in the non-market sector are:

Table title
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). That is, goods and services are provided at prices below the cost of provision, such as public school education, or public hospital services. 

Given the importance of non-market industries to the Australian economy, the ABS has a research agenda to address this gap in productivity statistics. In 2021, the ABS released experimental productivity estimates for the following components of the Education and Training and Health Care and Social Assistance divisions:

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?

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

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