U.S. worker productivity unexpectedly fell in the first quarter, leading to a jump in labor-related costs.
The Labor Department said on Thursday that nonfarm productivity, which measures hourly output per worker, decreased at a 0.6 percent annualized rate.
That was the weakest in a year and followed an upwardly revised 1.8 percent pace of increase in the fourth quarter.
The weakness in productivity is in line with a near stall in economic growth at the start of the year. Economists polled by Reuters had forecast productivity unchanged in the first quarter after a previously reported 1.3 percent growth rate in the prior quarter.
Compared to the first quarter of 2016, productivity increased at a 1.1 percent rate, suggesting a gradual improvement in the productivity trend.
Productivity has increased at an average annual rate of 0.6 percent over the last five years, well below its long-term rate of 2.1 percent from 1947 to 2016.
Weak productivity could make it difficult to boost annual economic growth to 4 percent as President Donald Trump has promised. The government reported last week that gross domestic product increased at a 0.7 percent rate in the first quarter, the worst performance in three years.