Multifactor productivity growth rate for service industries in New Zealand

Productivity is a measure of how efficiently inputs (capital and labour) are used within the economy to produce outputs. Productivity is commonly defined as a ratio of a volume measure of output to a volume measure of input.
Growth in productivity means that a nation can, for example, produce more output from the same amount of input, or the same level of output from fewer inputs. Productivity growth is an important contributing factor to a nation’s long-term material standard of living.

ANZSIC 2006: the Australian and New Zealand Standard Industrial Classification 2006. This classification is used to allocate enterprises undertaking similar productive activities to the same industry.

Capital-to-labour ratio: is a measure of the capital input index divided by the labour input index. Capital deepening is positive growth in the capital-to-labour ratio. Capital shallowing is a decline in the capital-to-labour ratio.

Capital income: is that part of the cost of producing gross domestic product (GDP) that consists of gross payments to capital. It represents the value added by capital in production, and is equivalent to the gross operating surplus, less the labour income of working proprietors, plus the capital proportion of taxes, less subsidies on production.

Capital productivity: is measured as a ratio of output to capital input. The ratio is derived by dividing the index of the chain-volume measure of GDP by an index of capital services. Capital productivity reflects not only the contribution of capital to changes in production, but also the contribution by labour and other factors affecting production.

Contribution of capital input: the growth in the capital input index, weighted by capital’s share of total income. Given that capital’s share of total income is always less than 100 percent, the contribution of capital input is always less than the growth in capital input. It is used for growth accounting for output.

Contribution of labour input: the growth in the labour input index, weighted by labour’s share of total income. Given that labour’s share of total income is always less than 100 percent, the contribution of labour input is always less than the growth in labour input. It is used for growth accounting for output.

Measured sector: the industry coverage of the productivity statistics is defined as the ‘measured sector’. It consists of industries AA1-MN2 (except LL2), RS1, and RS2. These industries mainly contain enterprises that are market producers. This means they sell their products for economically significant prices that affect the quantity that consumers are willing to purchase. The series is available from 1996.

Former measured sector: this is similar to the measured sector but has a narrower industry coverage, but longer time series. It includes industries AA1-KK1 and RS1. The series are available from 1978.

Labour income: the part of the cost of producing GDP that consists of gross payments to labour. It represents the value added by labour in production, and is equivalent to compensation of employees, plus the labour income of working proprietors, plus the labour proportion of taxes, less subsidies on production.

Labour input index: an index of the weighted number of hours paid in the measured sector. It is created by weighting together the industry-level labour volume series using labour income weights.

Labour productivity: measured as a ratio of output to labour input. Labour productivity estimates are indexes of real GDP per hour paid. Labour productivity reflects the contribution of labour to changes in product per labour unit, but is also influenced by the contribution of capital and other factors affecting production.

Multifactor productivity (MFP): The contribution of technology, advances in knowledge, improvements in management, or production techniques towards output growth. It represents the growth in output that cannot be attributed to either labour or capital input. An increase in multifactor productivity means that improved production techniques, for example, have led to an increase in output compared with the previous year while still using the same amount of inputs.

Output: chain-volume value added. Annual value added for the measured sector is derived following the same procedures used to derive constant-price GDP, a chained Laspeyres volume index of the constant-price value added of the industries making up the measured sector. The resulting chained volume series is re-expressed as an index with an expression base of 1000 in the March 1978 year.

Total income: the part of the cost of producing GDP that consists of gross payments to factors of production (labour and capital). It represents the value added by these factors in the process of production and is equivalent to current-price GDP.

https://datainfoplus.stats.govt.nz/Item/nz.govt.stats/d2d0ded2-dc45-4033-9b5b-3807c2b4edab/129

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Productivity measures will help people understand the long-term improvements needed in New Zealand's living standards, economic performance, and international competitiveness. Productivity statistics let government, researchers, and media know how the economy is performing.