5260.0.55.002 - Estimates of Industry Multifactor Productivity, 2017-18 Quality Declaration 
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 03/12/2018   
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ANALYSIS OF RESULTS


MARKET SECTOR PRODUCTIVITY - HOURS WORKED BASIS

Multifactor productivity (MFP) for the Australian market sector rose 0.5% in 2017-18, with chain volume measure gross value added (GVA) of 2.7% outpacing a 2.2% increase in combined inputs. The combined input growth represents capital services growth of 2.0% and hours worked growth of 2.4%. Over the current incomplete productivity growth cycle (2011-12 to current), hours worked based MFP of the market sector grew 0.8% per year on average, an improvement from the flat MFP growth recorded for the cycle of 2003-04 to 2011-12.

MARKET SECTOR MULTIFACTOR PRODUCTIVITY, HOURS WORKED BASIS
Graph: Market sector multifactor productivity, hours worked basis





MARKET SECTOR PRODUCTIVITY – QUALITY ADJUSTED HOURS WORKED BASIS

On a quality adjusted hours worked basis (QALI), market sector MFP grew 0.2%. The weaker growth in MFP measured on this basis is due to higher growth in quality adjusted labour input, reflecting positive contributions to labour quality from educational attainment and work experience.

KEY FIGURES - MARKET SECTOR, 2017-18

Hours worked basis
Quality adjustedhours worked basis

% change
% change
Multifactor Productivity
0.5
0.2
Gross Value Added
2.7
2.7
Labour Input
2.4
3.0
Capital Input
2.0
2.0
Labour Productivity
0.4
-0.2



ESTIMATES OF INDUSTRY PRODUCTIVITY

In 2017-18, MFP grew for seven out of the sixteen market sector industries.

PRODUCTIVITY GROWTH IN 2017-18, HOURS WORKED BASIS
Graph: Productivity growth in 2017-18, hours worked basis



The largest MFP gains were in:
  • Administrative and Support Services (8.2%),
  • Manufacturing (3.8%),
  • Accommodation and Food Services (3.7%), and
  • Professional, Scientific and Technical Services (3.7%).
The largest falls in MFP were in:
  • Agriculture, Forestry and Fishing (-7.0%), and
  • Art and Recreation Services (-4.9%).

KEY FIGURES, BY MARKET SECTOR INDUSTRIES, HOURS WORKED BASIS, ANNUAL PERCENTAGE CHANGE, 2017-18

MFP
Output (GVA)
Labour input (HW basis)
Capital input
Labour productivity
Capital productivity

Agriculture, forestry and fishing
-7.0
-5.1
7.1
0.4
-11.4
-5.5
Mining
0.9
2.9
3.3
1.6
-0.5
1.3
Manufacturing
3.8
3.1
-0.7
-0.8
3.7
3.9
Electricity, gas, water and waste services
-1.7
1.9
6.7
2.4
-4.5
-0.5
Construction
-0.8
5.1
7.7
2.0
-2.4
3.0
Wholesale trade
-0.8
0.7
0.9
2.7
-0.2
-1.9
Retail trade
-0.6
2.4
3.5
1.8
-1.1
0.6
Accommodation and food services
3.7
4.1
0.3
1.1
3.9
3.0
Transport, postal and warehousing
-3.0
0.8
4.7
2.7
-3.8
-1.9
Information, media and telecommunications
-0.8
2.7
1.5
5.2
1.2
-2.4
Financial and insurance services
2.9
3.4
-3.5
2.2
7.1
1.2
Rental, hiring and real estate services
-0.7
1.0
-0.4
3.2
1.4
-2.1
Professional, scientific and technical services
3.7
4.4
0.2
3.3
4.1
1.0
Administrative and support services
8.2
4.0
-4.2
1.3
8.5
2.7
Arts and recreation services
-4.9
3.5
11.6
3.5
-7.2
0.0
Other services
1.2
3.4
1.7
6.0
1.7
-2.5
Market sector
0.5
2.7
2.4
2.0
0.4
0.7




Agriculture, Forestry and Fishing: MFP growth fell 7.0% in 2017-18, marking the strongest productivity decline across the sixteen market sector industries. The decline reversed the significant productivity gain in the industry for 2016-17 (11.4%). The fall in MFP reflects a fall in GVA (-5.1%) mainly driven by a drop in Agriculture output, coupled with 2.1% growth in combined inputs. While growth in capital services was flat, the rise in combined inputs was driven by growth in hours worked (7.1%). MFP growth for Agriculture, Forestry and Fishing is typically volatile due to variation in weather conditions.

GROWTH IN PRODUCTIVITY AND COMPONENTS - AGRICULTURE, FORESTRY AND FISHING
Graph: Growth in productivity and components - Agriculture, Forestry and Fishing

Mining: MFP grew 0.9% in 2017-18. GVA growth strengthened to 2.9%, mainly driven by Oil and Gas Extraction followed by Exploration and Mining Support Services, Iron Ore Mining and Coal Mining. Capital services growth was subdued (1.6%) as the investment consolidation phase continues. However, hours worked, which has been weak in recent years rebounded to 3.3%, following the decline in 2016-17.

GROWTH IN PRODUCTIVITY AND COMPONENTS - MINING
Graph: Growth in productivity and components - Mining



Manufacturing: MFP growth rebounded 3.8% in 2017-18 to record its strongest annual growth since 2001-02. After 5 years of consecutive declines in GVA, Manufacturing recorded GVA growth of 3.1% in 2017-18, while labour and capital inputs experienced small declines. The increase in GVA was mainly driven by Food, Beverage and Tobacco and Other Manufacturing.

GROWTH IN PRODUCTIVITY AND COMPONENTS - MANUFACTURING
Graph: Growth in productivity and components - Manufacturing


Construction: MFP growth fell 0.8%, marking four years of negative productivity growth. The fall in MFP reflected strong growth in the combined inputs (5.9%) relative to GVA (5.1%). Growth in GVA was driven by strength in Heavy and Civil Engineering Construction due to strong public capital spending on roads.

GROWTH IN PRODUCTIVITY AND COMPONENTS - CONSTRUCTION
Graph: Growth in productivity and components - Construction

Finance and Insurance Services: MFP growth (2.9%) was recorded for 2017-18, extending positive MFP growth for the industry to eight years. This result was due to a 3.4% rise in GVA coupled with weaker growth in combined inputs (0.5%). The growth in GVA was driven by Other Financial and Insurance Services, which had increased growth in funds under management over the year. While capital services recorded the strongest growth (2.2%) since 2007-08, the 3.5% decline in hours worked resulted in subdued combined inputs.

GROWTH IN PRODUCTIVITY AND COMPONENTS - FINANCE AND INSURANCE SERVICES
Graph: Growth in productivity and components - Finance and Insurance Services



Professional, Scientific and Technical Services: MFP increased 3.7% on the back of a solid MFP growth in 2016-17, primarily due to GVA growth (4.4%) coupled with subdued growth in combined inputs (0.7%). Growth in hours worked of 0.2% for 2017-18 was the primary driver for the weakness in combined inputs growth.

GROWTH IN PRODUCTIVITY AND COMPONENTS - PROFESSIONAL, SCIENTIFIC AND TECHNICAL SERVICES
Graph: Growth in productivity and components - Professional, Scientific and Technical Services


EXPERIMENTAL STATE PRODUCTIVITY ESTIMATES

This release marks the second year of experimental estimates of state and territory productivity, covering the period of 1994-95 onwards (Tables 27 to 42). For more information on data sources and methodology, see Feature Article: Experimental Estimates of State Productivity.

There were mixed results across the states for MFP and labour productivity:
  • Positive MFP growth was recorded for Australian Capital Territory, Tasmania, Queensland, Western Australia and Northern Territory. New South Wales, Victoria and South Australia recorded falls.
  • Labour productivity growth was recorded for Northern Territory, Australian Capital Territory, Tasmania and Western Australia. The remainder of states recorded negative labour productivity growth.

STATE MFP AND LP GROWTH - 2017-18, PERCENTAGE CHANGE (a)
Graph: STATE MFP AND LP GROWTH - 2017-18, PERCENTAGE CHANGE (a)
(a) natural log growth x 100



NEW SOUTH WALES – RECORDS FLAT MFP IN 2017-18

CONTRIBUTIONS TO GVA GROWTH
Graph: CONTRIBUTIONS TO GVA GROWTH

  • MFP remained flat in 2017-18, following a period of substantial growth since 2008-09.
  • Market sector GVA experienced continued positive growth (2.6%) in 2017-18, with service industries dominating and strength from ongoing construction.
  • Hours worked contributed 1.8 percentage points to GVA growth, followed by capital services which contributed 0.9 percentage points.


VICTORIA – RECORDS NEGATIVE MFP GROWTH IN 2017-18

CONTRIBUTIONS TO GVA GROWTH
Graph: CONTRIBUTIONS TO GVA GROWTH
  • MFP fell 0.5% in 2017-18. MFP growth was stronger earlier in the time series, averaging 1.9 % per year for period 1995-96 to 2003-04.
  • Market sector GVA grew 3.0% in 2017-18.
  • Hours worked contributed 2.5 percentage points to GVA growth while capital services contributed 1.0 percentage point. Capital services were strong between 1999-00 and 2007-08, averaging 2.0% per year.


QUEENSLAND – RECORDS POSITIVE MFP GROWTH IN 2017-18

CONTRIBUTIONS TO GVA GROWTH
Graph: CONTRIBUTIONS TO GVA GROWTH

  • In 2017-18, MFP in Queensland experienced moderate growth of 0.8%. The growth in MFP was strong from 1995-96 to 2003-04, averaging 1.9% per year.
  • Market sector GVA grew 3.8% in 2017-18. Hours worked was the largest contributor to growth in GVA (2.2 percentage points).
  • Capital services growth has slowed since 2015-16, only contributing 0.8 percentage points to GVA growth in 2017-18. Capital services growth averaged 6.1% between 2005-06 and 2014-15, while Queensland was heavily investing in mining.


SOUTH AUSTRALIA – MFP FALLS IN 2017-18

CONTRIBUTIONS TO GVA GROWTH
Graph: CONTRIBUTIONS TO GVA GROWTH

  • MFP fell 0.5% in 2017-18, on the back of a moderate growth in preceding years.
  • Market sector GVA grew 1.4% in 2017-18, primarily driven by the upswing in hours worked, which contributed 1.2 percentage points to the growth.
  • Capital services contributed 0.7 percentage points to GVA growth this year. Contribution from capital services was strong earlier in the series, averaging 1.7 percentage points per year over the period 1999-00 to 2006-07.


WESTERN AUSTRALIA – POSITIVE GROWTH REBOUND FROM 2016-17

CONTRIBUTIONS TO GVA GROWTH
Graph: CONTRIBUTIONS TO GVA GROWTH

  • MFP in Western Australia grew 0.4% in 2017-18, rebounding from a 3.0% decline in 2016-17.
  • Market sector GVA grew 1.3% in 2017-18, partly recovering from a significant decline experienced last year.
  • Capital services contributed 0.8 percentage points to GVA growth. The state saw strong growth from capital services due to heavy investment in mining, averaging 8.3% over the period 2005-06 to 2015-16.


TASMANIA – RECORDS STRONG GROWTH IN MFP

CONTRIBUTIONS TO GVA GROWTH
Graph: CONTRIBUTIONS TO GVA GROWTH


  • MFP in Tasmania grew 1.4% in 2017-18, extending another year of MFP growth since 2015-16. MFP was relatively strong over the period 1995-96 to 2001-02, averaging 0.8% per year. However, the contribution of MFP fell by more than half to average 0.3 percentage points per year between 2002-03 and 2014-15.
  • Market sector GVA grew 3.5%, the highest growth in ten years.
  • Capital services and hours worked each contributed 1.0 percentage points to GVA growth.


NORTHERN TERRITORY – MFP GROWTH SLOWED IN 2017-18

CONTRIBUTIONS TO GVA GROWTH
Graph: CONTRIBUTIONS TO GVA GROWTH


  • MFP growth in Northern Territory slowed in 2017-18 to 0.1%.
  • Market sector GVA was subdued, recording growth of 0.9%.
  • Capital services contributed 1.4 percentage points to GVA growth.
  • Hours worked declined 1.2%, and hence detracted 0.6 percentage points from GVA growth.


AUSTRALIAN CAPITAL TERRITORY – RECORDS CONTINUED STRONG MFP GROWTH

CONTRIBUTIONS TO GVA GROWTH
Graph: CONTRIBUTIONS TO GVA GROWTH

  • The Australian Capital Territory recorded strong MFP growth (2.6%) in 2017-18, the third consecutive year of growth.
  • A rise in hours worked (4.3%) translated to a 2.9 percentage points contribution to GVA growth for the market sector (6.1%).
  • Capital services recorded a modest rise (1.7%) which contributed 0.6 percentage points to GVA growth.


PRODUCTIVITY GROWTH CYCLES

Growth cycle analysis can minimise the effects of some temporary influences (such as variation in capital utilisation) by averaging productivity measures over a cycle. In the latest complete cycle, 2003-04 to 2011-12, MFP recorded 0.3% decline per year. GVA growth slowed to 3.1% per year on average. However, the contributions from both capital services (2.2% per year) and hours worked (0.9% per year) increased.

The incomplete growth cycle recorded an average MFP growth of 0.5% per year since 2011-12. The market sector GVA grew modestly at 2.6% per year, while its components grew at a slower rate compared to completed growth cycles.

CONTRIBUTION TO OUTPUT GROWTH, BY GROWTH CYCLE, PERCENTAGE POINTS

Growth Cycles
Current incomplete growth cycle
1998-99 to 2003-04
2003-04 to 2011-12
2011-12 to 2017-18

Output (GVA) growth
3.6
3.1
2.6
Contribution to output growth
Capital services
1.7
2.2
1.2
Hours worked
0.7
0.9
0.5
Labour composition
0.3
0.3
0.3
Multifactor productivity
0.9
-0.3
0.5



REVISIONS

This publication incorporates revisions implemented in 2017-18 as follows:
  • The 2017-18 edition of Australian System of National Accounts, 2017-18 (cat. no. 5204.0) incorporates revisions in the 2016-17 annual supply and use tables. For specific details of the revisions, including changes to estimates, and the range of improvements incorporated in the revisions, please see Australian System of National Accounts, 2017-18 (cat. no. 5204.0).
  • Revisions to hours worked published in the Labour Force, Australia. For more information, please see Labour Force, Australia (cat. no. 6202.0).
  • The final rebenchmarking of Labour Force Survey to 2016 Census of Population and Housing data, scheduled for release on 13 Dec 2018 will be reflected in the 2018-19 release of 5260.0.55.002. Hours worked series used in this release is consistent with Australian System of National Accounts, 2017-18 (cat. no. 5204.0).