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Worldwide employment by U.S. multinational companies (MNCs) increased 3.3 percent in 2006, to 31.3 million workers, following a 1.4-percent increase in 2005. Employment in the United States by U.S. parent companies increased 2.7 percent, to 21.9 million workers, following a 0.8-percent increase. The employment by U.S. parents accounted for almost one-fifth of total U.S. employment in private industries. Employment abroad by the majority-owned foreign affiliates of U.S. MNCs increased 4.7 percent, to 9.4 million workers, following a 3.0-percent increase.

Worldwide capital expenditures by U.S. MNCs increased 17.8 percent in 2006, to $547.6 billion, following an increase of 7.2 percent in 2005. Capital expenditures in the United States by U.S. parents increased 16.5 percent, to $394.2 billion, following an increase of 9.0 percent. Capital expenditures abroad by majority-owned foreign affiliates increased 21.3 percent, to $153.4 billion, following a 2.4-percent increase.

Sales by U.S. parent companies increased 7.5 percent in 2006, to $8,283.7 billion, following a 9.1-percent increase in 2005. Sales by majority-owned foreign affiliates increased 10.3 percent, to $4,113.9 billion, following a 12.6-percent increase.

Employment in the United States by majority-owned U.S. affiliates of foreign MNCs increased 1.8 percent in 2006, to 5.3 million workers, following an increase of 0.9 percent in 2005. The employment by affiliates accounted for 4.5 percent of total U.S. employment in private industries. Capital expenditures by these affiliates increased 20.2 percent in 2006, to $141.2 billion, following a 4.5 percent increase in 2005. Sales by affiliates increased 10.8 percent, to $2,764.4 billion, following an 8.8-percent increase.

Employment in the United States by U.S. parent companies accounted for 70 percent of the worldwide employment of U.S. MNCs in 2006, down from 71 percent in 2005. The U.S.-parent share of the worldwide capital expenditures of U.S. MNCs in 2006 was 72 percent, down from 73 percent in 2005.

The U.S.-parent share of MNC activity can change for a number of reasons, and the changes do not uniformly correspond to either additions to, or subtractions from, employment and capital expenditures in the United States. Examples of factors other than production shifting that might be associated with a change in the parent and affiliate shares of MNC activity include different rates of economic growth in the United States and in specific markets where investment is occurring abroad, or the creation of new market opportunities abroad that cannot be served by exports from the United States. Additional discussion of data and analytical considerations may be found in "A Note on Patterns of Production and Employment by U.S. Multinational Companies," in the March 2004 issue of the Survey of Current Business.

Revisions.--The MNC estimates for 2005 presented in this release supercede preliminary estimates that were released in the second half of 2007. For U.S. parent companies, the estimates of employment were revised down 2.0 percent, the estimates of capital expenditures were revised up 4.5 percent, and the estimates of sales were revised up 1.5 percent. For majority-owned foreign affiliates, the estimates of employment were revised down 0.3 percent, the estimates of capital expenditures were revised down 0.3 percent, and the estimates of sales were revised up 0.9 percent. For majority-owned U.S. affiliates of foreign MNCs, the estimates of employment were revised up 1.9 percent, the estimates of capital expenditures were revised down 3.0 percent, and the revision to the estimates of sales was negligible.

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TECHNICAL NOTE

For the fifth consecutive year, the Bureau of Economic Analysis is releasing advance summary estimates of employment, sales, and capital expenditures by U.S. parent companies, by their foreign affiliates, and by U.S. affiliates of foreign MNCs. Estimates based on more complete source data, including country and industry detail, will be released later this year.

The estimates presented in this release were constructed from data collected by BEA in two distinct surveys of MNC operations: (1) a survey of U.S. MNCs that covers the operations of both U.S. parent companies and their foreign affiliates, and (2) a survey of the operations of U.S. affiliates of foreign MNCs. Because a U.S. parent company may itself be foreign-owned, there is some overlap between the data on U.S. parent companies and on U.S. affiliates; thus, to avoid duplication, data on U.S. parents and U.S. affiliates should not be added together to produce U.S. totals.

The estimates presented here pertain to nonbank U.S. parent companies and their majority-owned nonbank foreign affiliates, and to majority-owned nonbank U.S. affiliates of foreign MNCs. Data on all nonbank U.S. and foreign affiliates, including affiliates that are not majority-owned, will be released by BEA later this year. (In these data series, "affiliates" are defined as businesses in which an investor of another country holds at least 10-percent ownership.)

The most recent data show that nonbank foreign affiliates that were not majority-owned employed 1.4 million workers, and nonbank U.S. affiliates that were not majority-owned employed 0.4 million workers, in 2005. Data on bank parents and affiliates are currently only available from benchmark surveys, which are conducted once every five years. To close this gap in coverage, BEA has taken steps to extend the coverage of its annual surveys of MNC operations to include banks, with an annual time series set to begin with data for 2007.

Based on data from the 1999 Benchmark Survey of U.S. Direct Investment Abroad (the 2004 benchmark survey covered banks, but the results released to date have covered only nonbanks), U.S. bank parents employed 1.0 million workers, and foreign affiliates of U.S. bank parents, plus bank affiliates of U.S. nonbank parents, together employed 0.2 million workers. (Data for U.S. parents and foreign affiliates in banking will be included in the presentation of final results from the 2004 benchmark survey.) The most recent data on U.S. affiliates in banking cover the benchmark-survey year 2002: These data show that U.S. affiliates that were banks employed 0.1 million workers in 2002. For both U.S. bank affiliates of foreign companies and foreign bank affiliates of U.S. companies, almost all of the employment was by majority-owned affiliates.

For both U.S. MNCs and U.S. affiliates of foreign MNCs, the estimates of employment cover the total number of full-time and part-time employees on the payroll at the end of the year. The estimates of sales cover gross sales minus returns, allowances and discounts, or gross operating revenues. The estimates of capital expenditures cover total expenditures on property, plant, and equipment (that is, expenditures for land and depreciable structures and equipment); they are gross of any sales, retirements, or transfers of previously owned tangible assets. Capital expenditures include spending for equipment that is leased or rented to others, which in some industries-such as automotive equipment rental and leasing-can be very large (the value of sales, retirements, or transfers in these industries also can be very large). It has come to BEA's attention that the data reported by some companies excludes expenditures for equipment that is leased or rented to others. BEA is working with survey respondents to obtain this information and will be publishing revised statistics later this year. (See footnote 1 to tables 1 and 3.)

In addition to presenting data collected directly in its surveys of MNC operations, BEA uses data collected on costs incurred and profits earned in production to estimate the value added of U.S. parent companies, of majority-owned foreign affiliates, and of majority-owned U.S. affiliates of foreign companies. Value added estimates indicate the contribution of parents or affiliates to gross domestic product in the United States or in foreign host countries. The latest estimates of the value added of U.S. parent companies and majority-owned foreign affiliates, which cover the year 2005, are presented in "Operations of U.S. Multinational Companies in 2005" in the November 2007 issue of the Survey of Current Business. The latest estimates of the value added of majority-owned U.S. affiliates of foreign companies, which also cover 2005, are presented in "U.S. Affiliates of Foreign Companies: Operations in 2005," in the August 2007 issue of the Survey.

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Summary BEA estimates are available on recorded messages at the time of public release at the following telephone numbers

• (202) 606-5306 Gross domestic product
• (202) 606-5303 Personal income and outlays

BEA's national, regional, international, and industry estimates, the Survey of Current Business, and BEA news releases are available on BEA's Web site at www.bea.gov. By visiting the site, you can also subscribe to receive free e-mail summaries of BEA releases and announcements.

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