Economy

US productivity rose 0.4% in the first quarter, vs 0.6% increase expected

Key Points
  • U.S. worker productivity increased less than initially thought in the first quarter.
  • Growth in unit labor costs was a bit stronger, supporting views that inflation pressures were steadily building up.
  • Nonfarm productivity, which measures hourly output per worker, rose at a weaker-than-expected 0.4 percent annualized rate in the January-March quarter.
A workers inspects hides to check for consistency in thickness at the Horween Leather Co. tannery in Chicago, last April.
Christopher Dilts | Bloomberg | Getty Images

U.S. worker productivity increased less than initially thought in the first quarter, while growth in unit labor costs was a bit stronger, supporting views that inflation pressures were steadily building up.

The Labor Department said on Wednesday nonfarm productivity, which measures hourly output per worker, rose at a 0.4 percent annualized rate in the January-March quarter, instead of the 0.7 percent pace it reported last month.

Fourth-quarter productivity rose at an unrevised 0.3 percent. Economists polled by Reuters had expected that first-quarter productivity would be revised down to a 0.6 percent growth rate.

Compared to the first quarter of 2017, productivity increased at an unrevised rate of 1.3 percent.

Hourly compensation accelerated at a 3.3 percent rate in the January-March quarter, rather than the 3.4 percent pace reported last month. Compensation rose at 2.9 percent pace in the fourth quarter. It increased at a 2.6 percent rate compared to the first quarter of 2017.

Unit labor costs, the price of labor per single unit of output, rose at a 2.9 percent pace in the first three months of the year, rather than the 2.7 percent rate reported in May.

Labor costs rose at a rate of 2.5 percent in the fourth quarter. They were up at a 1.3 percent rate compared to the first quarter of 2017.

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