Estimates of Industry Level KLEMS Multifactor Productivity

The KLEMS framework provides a detailed statistical decomposition on the contributions to output growth, represented by five input categories - capital (K), labour (L), energy (E), materials (M), and services (S). This allows for analysis on the changes to the input mix, such as the role of labour hours and composition of relative capital services or intermediate inputs, observed in industry output growth.

In 2021-22, KLEMS MFP grew, on quality adjusted hours worked basis, in ten of the sixteen market sector industries.

Agriculture, forestry and fishing posted the strongest rise in KLEMS MFP (5.8%) across the sixteen market sector industries, marking the second year of consecutive productivity growth. The strength in MFP reflects increased agricultural production and subdued usage of key farm inputs amid elevated energy and agricultural labour costs. The strength in gross output (4.7%) was underpinned by the growth of the agriculture subdivision due to favourable weather conditions across most of Australia, softened somewhat by flooding in parts of New South Wales and Queensland. The volume of intermediate inputs was constrained by higher prices of key inputs such as fertiliser, petrol and services to agriculture. As a result, intermediate inputs detracted 1.5 ppts from gross output growth.

Information, media and telecommunications saw a strong KLEMS MFP result, rising 4.1% following a 1.0% fall in 2020-21. This was the strongest growth in this industry since 1995-96. Output grew at 7.4% which was faster than the increase in intermediate inputs. The strength in output was due to increased demand for software publishing, motion picture production and theatre services. Intermediate inputs grew at a slower pace reflecting partial cost offsets from the provision of telecommunication services through established infrastructure and an improved fibre optic network.  

Transport, postal and warehousing showed significant improvement in KLEMS MFP, following a large fall in 2020-21 due to border closures and travel restrictions. KLEMS MFP rose by 3.0% due a strong recovery in gross output (11.0%) outweighing the rise in intermediate inputs (+6.6 ppts). The productivity recovery reflects an improvement in flight capacity utilisation after the gradual relaxation of COVID-19 related travel restrictions. Airlines serviced much larger passenger loads and increased flights towards longer, more expensive routes without incurring similar growth in associated costs, such as fuel, aircraft repair and maintenance, and airport operations.

Mining recorded the largest fall (2.2%) in KLEMS MFP due to disruptions to coal and iron ore production caused by flooding of mines, COVID-19 related absenteeism and labour shortages. Gross output recorded a small rise (0.2%), reversing the strong fall of 3.1% in 2020-21. The increase in output was driven by strength in oil and gas mining, offset by the weaker production in iron ore and coal mining which was impacted by wet weather and mine flooding. Among intermediate inputs, Services grew strongly reflecting additional cleanup, repairs and maintenance at flooded mine sites, as well the resumption of heavy maintenance and construction activities after COVID-19 lockdowns.  Capital and labour services also recorded growth, contributing 0.8 ppts and 0.2 ppts to output growth, respectively.

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.

Industry cost structures are very diverse varying from industry to industry and over time. In 2021-22, the largest cost shares were observed in the following industries:

• Mining is a typically capital-intensive industry, with non-IT capital services representing over half (56.8%) of the industry's total input costs. This has grown from the 52.5% cost share in 2020-21.
• Administrative and support services is a labour-intensive industry, with labour services accounting for 60.0% of the industry's total input costs.
• Manufacturing is reliant on materials for production, with materials representing nearly half (48.0%) of total input costs.
• Information, media and telecommunications has one of the highest Services cost shares among market sector industries (52.5%), indicating strong outsourcing activity.

Industries may also undergo structural changes over time, such as, responding to changes in the relative prices of inputs, which can cause an industry's cost shares to vary.

This publication incorporates revisions as follows:

• Implementation of historical revisions in the national accounts: Improved estimates of the Annual National Accounts: results of the 2023 historical revisions | Australian Bureau of Statistics (abs.gov.au)
• Implementation of 2021-22 benchmarks in the national accounts: Improved Annual National Accounts estimates: Results of the implementation of the 2021-22 benchmarks | Australian Bureau of Statistics (abs.gov.au)
• Revisions to Labour Account’s hours worked reflecting methodological refinements and updated source data Labour Account Australia, June 2023 | Australian Bureau of Statistics (abs.gov.au).
• Updated estimates of labour composition, reflecting the estimation for divisions L, M and N under the Australian and New Zealand Standard Industrial Classification 2006.

For enquiries about these and related statistics, contact the Customer Assistance Service via the ABS website Contact Us page. The ABS Privacy Policy outlines how the ABS will handle any personal information that you can provide to us.

This release previously used catalogue number 5260.0.55.004.