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

  • 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
A workers inspects hides to check for consistency in thickness at the Horween Leather Co. tannery in Chicago, last April.

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.