Why Is Manufacturing Productivity Growth So Low?

Enghin Atalay, Ali Hortacsu, Nicole Kimmel and Chad Syverson

No 26-19, Working Papers from Federal Reserve Bank of Philadelphia

Abstract: We examine the recent slow growth in manufacturing productivity. We show that nearly all measured TFP growth since 1987 — and its post-2000s decline — comes from a few computer-related industries. We argue conventional measures understate manufacturing productivity growth by failing to fully capture quality improvements. We compare consumer to producer and import price indices. In rapidly changing industries, consumer price indices indicate less inflation, suggesting mismeasurement in standard industry deflators. Using an input-output framework, we estimate that TFP growth is understated by 1.4 percentage points in durable manufacturing and 0.3 percentage points in nondurable manufacturing and is slightly overstated in nonmanufacturing industries.

Keywords: manufacturing; productivity measurement; ICT (search for similar items in EconPapers)
JEL-codes: C67 D24 E01 E31 (search for similar items in EconPapers)
Pages: 78
Date: 2026-04-07
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Working Paper: Why Is Manufacturing Productivity Growth So Low? (2025)
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DOI: 10.21799/frbp.wp.2026.19

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