Estimates of Industry Multifactor Productivity

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

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Reference period
2021-22 financial year
Released
13/12/2022
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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)3.63.02.8
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
Mining-0.90.6
Manufacturing-0.2-0.1
Electricity, gas, water and waste services0.10.0
Construction-0.1-0.2
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
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 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?

Q. What is labour productivity?

Q. What is capital productivity and capital deepening?

Q. What is multifactor productivity?

Q. What measures are available?

Q. What are the different measures of labour input?

Q. What is KLEMS?

Q. Are productivity statistics revised?

Q. What is a growth cycle?

Q. What industries are covered?

Q. Why do some industries not have productivity statistics?

Q. What is growth accounting?

Interpreting productivity results

Q. How is productivity data used?

How do I interpret productivity results?

Q. What are some limitations of productivity analysis?

Q. How can I get more information on productivity?

Data downloads

Tables 1 to 19: Estimates of industry multifactor productivity

Data files
Download xlsx [528.76 KB]

Tables 20 to 26: Experimental estimates of industry multifactor productivity

Data files
Download xlsx [135.08 KB]

Tables 27 to 42: Experimental estimates of state productivity

Data files
Download xlsx [220.13 KB]

Methodology

Estimates of Industry Multifactor Productivity methodology, 2021-22 financial year

Articles