ANALYSIS OF RESULTS

In 2014-15, positive KLEMS MFP growth was recorded by 9 of the 16 market sector industries.



The strongest MFP growth was recorded in Mining (3.8 %pts); Other services (2.7 %pts); and Financial and insurance services (1.9 %pts). The largest decreases in MFP were recorded in Arts and recreation services (2.3 %pts); Professional, scientific and technical services (2.1 %pts); and Transport, postal and warehousing (1.4 %pts).

Reflecting improvements to infrastructure capacity, Mining continued to record positive output growth (3.6%) in 2014-15 building on a strong 2013-14 result (6.0%). The main contributor to Mining output growth in 2014-15 was MFP (3.8 %pts). Non-IT capital services, which averaged 5.0 %pts contribution between 2006-07 and 2013-14 has tapered off in 2014-15, contributing 2.8 %pts. Hours worked, which has recorded positive contributions since 2000-01, detracted 2.5 %pts from Mining output growth in 2014-15.

Other services also saw strong MFP growth of 2.7 %pts. Output in this industry grew 3.0% with intermediate input Services contributing to half of that growth.

Financial and insurance services recorded strong Gross output growth of 4.9% in 2014-15. Services intermediate input and MFP were the main contributors (2.6 %pts and 1.9 %pts respectively).

Electricity, gas, water and waste services recorded its strongest MFP growth since 1996-97 (1.4 %pts). Although gross output growth was modest (1.2%), falls were recorded in the contributions from Hours worked (1.0 %pts) and Materials (0.7 %pts).

For Arts and recreation services, strong contributions from Hours worked, Services intermediate input, and Capital inputs outpaced Gross output growth, resulting in MFP recording a fall of 2.4 %pts. This result offset most of the positive MFP recorded a year earlier.

Industry		Contribution to Gross Output Growth
	Gross Output Growth	Capital		Labour		Intermediate Input			KLEMS MFP (b)
		IT	Non-IT	Hours Worked	Composition	Energy	Materials	Services
Agriculture, forestry and fishing	0.01	0.00	-0.06	-0.17	0.02	-1.05	0.73	0.00	0.55
Mining	3.63	0.01	2.82	-2.52	0.03	-0.18	-1.15	0.78	3.83
Manufacturing	-1.61	-0.01	-0.10	-0.10	0.07	-1.29	-0.25	0.36	-0.28
Electricity, gas, water and waste services	1.18	0.07	0.43	-0.98	-0.04	0.48	-0.65	0.52	1.35
Construction	0.27	0.03	0.38	-0.09	0.08	-0.10	-1.57	2.49	-0.94
Wholesale trade	-1.14	0.13	0.14	0.19	0.21	-0.05	-0.61	-1.65	0.50
Retail trade	0.82	0.07	0.65	0.92	0.16	-0.13	-0.13	-0.54	-0.19
Accommodation and food services	1.84	0.01	0.08	1.98	-0.06	-0.16	-0.02	0.00	0.00
Transport, postal and warehousing	2.77	0.05	0.45	0.89	0.09	-1.46	0.34	3.85	-1.43
Information, media and telecommunications	7.17	0.26	0.57	1.33	-0.02	-0.14	0.14	4.44	0.60
Financial and insurance services	4.93	0.49	0.18	-0.43	0.15	-0.01	0.03	2.59	1.93
Rental, hiring and real estate services	5.07	-0.08	0.72	0.83	0.10	-0.03	-0.14	3.41	0.26
Professional, scientific and technical services	1.34	0.14	0.27	2.35	0.20	-0.06	-0.16	0.68	-2.07
Administrative and support services	3.04	0.02	0.02	1.16	0.25	-0.04	-0.01	1.57	0.07
Arts and recreation services	2.69	0.09	0.37	2.34	0.02	-0.03	0.02	2.22	-2.34
Other services	3.04	0.17	0.40	-0.62	-0.23	0.00	-0.87	1.50	2.69

(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 share. Two period average cost shares for each industry are reported in the table below. For example, in 2014-15, Services intermediate input comprised almost one third of Agriculture, forestry and fishing current price gross output.

Variations in the cost shares for 2014-15 show that industry cost structures are very diverse:

• For ten industries, intermediate inputs represented more than half of their total cost in 2014-15. Nine industries had Services cost shares exceeding 40% in 2014-15, while Manufacturing stands out as being relatively more Materials intensive.
• Transport, postal and warehousing and Manufacturing had the largest Energy cost shares.
• Mining and Financial and insurance services are relatively more capital intensive, particularly in Non-IT capital, and
• Administrative and support services; Other services; Retail trade and Professional, scientific and technical services are relatively more labour intensive.

Individual industries may also undergo structural change over time such as, for example, responding to changes in the relative prices of inputs. This can cause industry's cost shares to vary. For example, Electricity, gas, water and waste services has become less Energy intensive over time, while Construction is increasingly using Services intermediate input.

Industry	Capital Services - IT	Capital Services - Non-IT	Labour Services (c)	Energy	Materials	Services
Agriculture, forestry and fishing	0.22	28.62	11.93	4.68	21.80	32.75
Mining	0.23	38.83	13.62	4.67	7.62	35.04
Manufacturing	0.41	9.05	18.59	8.50	45.62	17.82
Electricity, gas, water and waste services	1.12	28.72	15.18	4.82	4.85	45.30
Construction	0.59	8.69	21.57	1.65	22.91	44.61
Wholesale trade	1.47	14.93	31.82	3.48	6.54	41.76
Retail trade	1.99	14.53	43.82	2.20	6.55	30.89
Accommodation and food services	0.41	10.76	36.13	2.56	27.83	22.31
Transport, postal and warehousing	0.71	16.99	26.86	9.65	2.91	42.88
Information, media and telecommunications	3.72	23.07	18.65	2.21	4.53	47.82
Financial and insurance services	5.53	32.62	23.65	0.53	0.33	37.34
Rental, hiring and real estate services	2.12	26.36	20.12	2.10	0.83	48.47
Professional, scientific and technical services	2.14	6.62	41.37	0.78	1.30	47.79
Administrative and support services	0.36	1.23	51.91	0.41	2.52	43.57
Arts and recreation services	0.97	11.97	25.70	0.85	19.94	40.58
Other services	1.04	6.16	45.77	0.65	24.66	21.72

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


REVISIONS

This publication incorporates revisions implemented in the 2015-16 edition of Australian System of National Accounts (ASNA) (cat. 5204.0). They include:

• revisions to all components back to 2012-13, due to updated source data and methods;
• revisions to capital services (across the full time span) due to improvements to capital stock assumptions and revisions to the industry composition of equipment and structures. The main industries impacted are Construction, Rental, hiring and real estate services, Administration and support services, and Other services. For a more detailed description, see the Analysis of Results section in the ASNA; and
• revisions to Hours worked back to 2012-13, due to Labour Force Survey re-benchmarking and seasonal re-analysis. For a more detailed description, see the July 2016 edition of Labour Force, Australia (cat no. 6202.0).

There were also revisions within intermediate input indexes and their cost shares, particularly Materials and Services (across the full time span), due to the reclassification of the supply-use product Printing from Materials to Services. The main industries impacted are Retail trade, and Information, media and telecommunications. This reclassification has no impact on total intermediate inputs.

Revisions were also incorporated to Labour composition in the post-2011 census period, due to a correction in the extrapolation method. This error had previously overstated growth in Labour composition (and understated MFP on a quality-adjusted hours worked basis)

More information on revisions is available in the ASNA as well as the 2015-16 edition of Estimates of Industry Multifactor Productivity (cat. no. 5260.0.55.002).