The paper derives measures of sectoral productivity from a model specification that allows for cross-sectional specific trends and time varying slopes in panel models with fixed N. The specification nests a number of commonly used panel data models introduced in the literature which deal with group specific trends. The econometric model is represented in state-space form. We provide a production frontier interpretation of this group specific temporal variation and derive a post-estimation growth accounting to provide a quantitative assessment of the main factors behind sectoral labour productivity growth. We make use of the EU-KLEMS dataset, covering the period 1977–2007 for 13 countries and 20 sectors of each economy.