How do the multifactor productivity measures for private business and private nonfarm business differ from the measures for the manufacturing sector and manufacturing industries?
The multifactor productivity measures for private business and private nonfarm business use a value-added concept of output. Value added measures the contributions of capital and labor in production. In private business and private nonfarm business, value added output is compared to only two inputs, capital and labor. In measuring labor input for these major sectors, the effects of changing labor composition are estimated. For the manufacturing sector and manufacturing industries, output is “sectoral output,” which measures the total value of production including purchased intermediate inputs, but excludes shipments between establishments in the same industry/sector. Multifactor productivity is measured by comparing sectoral output to three classes of inputs: labor, capital, and purchased intermediates (including energy, materials, and business services from outside of manufacturing). For the manufacturing sector and manufacturing industries, labor input is a direct aggregate of hours,
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