Sectoral output
Encyclopedia
Sectoral output for an industry or combination of industries ("sector") is the value of the sector's gross output
minus the value of shipments within the sector from one establishment to another.
Value here is measured for a specified time period and usually in units of nominal money. It may be converted to constant units by multiplying by a price index
to adjust for changes in prices over time and changes in quality of the goods and services produced.
A sectoral output measure is conceptually different from measures of gross output
or value-added output
. Gross output for the sector consists of sales, or receipts, and other operating income, plus commodity taxes and changes in inventories. Value-added measures exclude the value of intermediate inputs such as material, energy, and services, whether from the same industry or others. Thus gross output is larger than sectoral output which is larger than value-added output.
Sectoral output is the measure of output used in "KLEMS" multifactor measures of productivity
, which attempt to account for all direct inputs to production: capital services (K), labor services (L), energy (E), materials purchased (M), and services purchased (S).
When calculating labor productivity
, a value-added measure of output should be used to avoid counting other inputs (like purchased materials) as if they were created by the labor and capital applied within the sector.
The definition of the sectoral output has been attributed to Frank M. Gollop.
Gross Output
Gross output is an economic concept used in national accounts such as the United Nations System of National Accounts and the US National Income and Product Accounts...
minus the value of shipments within the sector from one establishment to another.
Value here is measured for a specified time period and usually in units of nominal money. It may be converted to constant units by multiplying by a price index
Price index
A price index is a normalized average of prices for a given class of goods or services in a given region, during a given interval of time...
to adjust for changes in prices over time and changes in quality of the goods and services produced.
A sectoral output measure is conceptually different from measures of gross output
Gross Output
Gross output is an economic concept used in national accounts such as the United Nations System of National Accounts and the US National Income and Product Accounts...
or value-added output
Value added
In economics, the difference between the sale price and the production cost of a product is the value added per unit. Summing value added per unit over all units sold is total value added. Total value added is equivalent to Revenue less Outside Purchases...
. Gross output for the sector consists of sales, or receipts, and other operating income, plus commodity taxes and changes in inventories. Value-added measures exclude the value of intermediate inputs such as material, energy, and services, whether from the same industry or others. Thus gross output is larger than sectoral output which is larger than value-added output.
Sectoral output is the measure of output used in "KLEMS" multifactor measures of productivity
Multifactor productivity
Multifactor productivity measures the changes in output per unit of combined inputs. In the United States, Indices of MFP are produced for the private business, private nonfarm business, and manufacturing sectors of the economy...
, which attempt to account for all direct inputs to production: capital services (K), labor services (L), energy (E), materials purchased (M), and services purchased (S).
When calculating labor productivity
Labor productivity
Workforce productivity is the amount of goods and services that a worker produces in a given amount of time. It is one of several types of productivity that economists measure. Workforce productivity can be measured for a firm, a process, an industry, or a country...
, a value-added measure of output should be used to avoid counting other inputs (like purchased materials) as if they were created by the labor and capital applied within the sector.
The definition of the sectoral output has been attributed to Frank M. Gollop.