ANALYSIS OF RESULTS

In 2015-16, positive KLEMS MFP growth was recorded by 10 of the 16 market sector industries.



The strongest KLEMS MFP growth was recorded in Rental, hiring and real estate services (3.8 ppts); Wholesale trade (3.5 ppts); and Information, media and telecommunications (2.5 ppts). The largest decreases in KLEMS MFP were seen in Agriculture, forestry and fishing (2.7 ppts); Administrative and support services (1.9 ppts); and Arts and recreation services (0.9 ppts).

Reflecting major expansion in commercial real estate demand and growth, Rental hiring and real estate services continued to record positive output growth (7.7%) in 2015-16, building on strong output growth since 2013-14. The main contributors to output growth were KLEMS MFP (3.8 ppts) and Services component of Intermediate inputs (3.3 ppts).

Wholesale trade also saw strong KLEMS MFP growth of 3.5 ppts, which was the strongest contributor to output growth of 3.5%. All other inputs contributed positively, except for hours worked which detracted 2.3 ppts from output growth.

Information, media and telecommunications recorded strong gross output growth of 5.3% in 2015-16. KLEMS MFP and services intermediate inputs were the main contributors (2.5 ppts and 1.8 ppts, respectively).

In Agriculture, forestry and fishing, output grew 4.7%. However, the inputs used in the production process outpaced output growth, where especially strong contributions from Services (3.4 ppts) and Materials (3.2 ppts), resulting in KLEMS MFP falling 2.7 ppts.

In Administrative and support services, MFP fell by 1.9 ppts as output growth (2.7%) was outpaced by the contributions from hours worked (3.2 ppts) and intermediate services (1.0 ppts).

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	4.74	0.00	-0.22	0.40	0.03	0.67	3.17	3.40	-2.71
Mining	1.74	0.00	1.32	0.19	0.09	1.07	-0.40	-2.06	1.53
Manufacturing	-0.30	-0.01	-0.18	-0.98	0.12	-0.25	1.22	-0.59	0.37
Electricity, gas, water and waste services	3.77	0.06	0.36	0.37	0.09	0.95	-0.16	2.06	0.05
Construction	0.27	0.01	0.18	0.29	0.09	-0.20	0.42	0.34	-0.86
Wholesale trade	3.51	0.14	0.27	-2.32	0.26	0.13	0.29	1.20	3.54
Retail trade	4.36	0.02	0.38	1.05	0.18	-0.01	0.60	1.32	0.82
Accommodation and food services	2.92	0.01	0.05	0.23	0.07	0.03	-0.25	1.24	1.54
Transport, postal and warehousing	1.19	0.09	0.35	0.52	0.13	0.82	-0.02	-0.47	-0.22
Information, media and telecommunications	5.28	0.25	0.69	-0.36	0.15	0.13	0.12	1.77	2.52
Financial and insurance services	3.22	0.42	0.15	0.79	0.18	-0.03	0.03	1.13	0.55
Rental, hiring and real estate services	7.74	-0.07	0.84	-0.16	0.08	-0.01	0.04	3.28	3.75
Professional, scientific and technical services	4.25	0.08	0.17	1.39	0.17	0.00	0.11	2.32	0.01
Administrative and support services	2.69	0.04	0.03	3.18	0.23	0.00	0.11	1.02	-1.93
Arts and recreation services	3.04	0.06	0.35	1.83	0.07	-0.03	0.09	1.56	-0.88
Other services	-3.61	0.07	0.33	-0.52	0.15	-0.02	-1.68	-1.82	-0.11

(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 2015-16, Services intermediate input comprised over one third of Agriculture, forestry and fishing current price gross output.

Variations in the cost shares for 2015-16 show that industry cost structures are very diverse:

• For eleven industries, intermediate inputs represented more than half of their total cost. Manufacturing stands out as being the most Materials intensive (44.9%). Transport, postal and warehousing and Manufacturing had the largest Energy cost shares (8.1% and 6.7%, respectively).
• Mining and Financial and insurance services are relatively more capital intensive, particularly in Non-IT capital (34.5% and 37.0%, respectively).
• High cost shares for labour were observed in Administrative and support services (57.2%); Retail trade (45.1%); Professional, scientific and technical services (44.1%); and Other services (44.1%).

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 & waste services and Construction have become more services intensive over time.

Industry	Capital Services - IT	Capital Services - Non-IT	Labour Services (c)	Energy	Materials	Services
Agriculture, forestry and fishing	0.19	28.84	12.59	4.42	19.73	34.22
Mining	0.19	34.49	15.29	5.13	6.68	38.22
Manufacturing	0.35	9.16	18.91	6.68	44.87	20.03
Electricity, gas, water and waste services	1.17	26.11	13.78	5.21	3.98	49.75
Construction	0.46	8.59	21.84	1.21	21.00	46.90
Wholesale trade	1.51	14.84	33.43	2.82	5.69	41.72
Retail trade	1.67	13.81	45.10	1.77	6.38	31.27
Accommodation and food services	0.38	10.16	37.71	2.53	26.46	22.77
Transport, postal and warehousing	0.82	17.82	26.67	8.14	2.48	44.08
Information, media and telecommunications	3.86	21.13	19.16	1.83	4.21	49.81
Financial and insurance services	5.74	36.96	19.39	0.51	0.46	36.95
Rental, hiring and real estate services	1.65	27.67	20.45	1.82	0.87	47.53
Professional, scientific and technical services	1.76	5.32	44.12	0.67	1.11	47.02
Administrative and support services	0.58	2.25	57.20	0.32	1.64	38.02
Arts and recreation services	1.07	12.03	24.98	0.69	17.05	44.18
Other services	1.01	5.35	44.05	0.56	23.46	25.57

(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 2016-17 as follows:

• The 2016-17 edition of Australian System of National Accounts (cat. no. 5204.0) incorporates historical revisions in the 2015-16 annual supply and use tables. The revisions impacted estimates of gross value added, capital services and income shares across the full time span. For specific details of the revisions, including changes to estimates, and the range of improvements incorporated in the historical revisions, please see Feature article: Improved estimates of the annual National Accounts in Australian System of National Accounts, 2016-17 (cat. no. 5204.0).
• Revisions to hours worked across the full time span published in LFS 6202.0 August 2017. These revisions impacted annual growth in hours worked indexes but averaged to zero over the timespan. For more information, please see main features in Labour Force, Australia, Aug 2017 (cat. no. 6202.0).
• Revisions to hours worked (from 2011-12 onwards) due to re-benchmarking of hours worked to incorporate updated Estimated Residence Population (ERP) figures which include interim 2016 Census results. This is the first time the ABS have included the ERP estimates with interim Census results in the LFS data. For more information, please see Labour Force, Australia - Rebenchmarked Estimates, October 2017 (cat. no. 6202.0.55.003).