WASHINGTON — First quarter nonfarm productivity rose by 0.7%, a slightly smaller gain than the 0.9% rise expected.
Unit labor costs rose by 2.7%, a slower pace than the 3.0% gain expected, but still up from the 2.1% increase in the previous quarter.
On a year/year basis, nonfarm productivity was up 1.3% in the first quarter, a slightly faster pace than the 1.2% year/year rate in the fourth quarter. Unit labor costs rose 1.1% year/year in the first quarter, slower than the 1.6% gain in the previous quarter. However, that slowdown was due in large part to base effects from a 4.8% quarter/quarter surge in the first quarter of 2017.
The output component of nonfarm productivity rose 2.8%, slower than the revised 3.7% increase in the previous quarter, while hours worked growth slowed even faster to 2.1% from 3.3%.
First quarter hourly compensation rose 3.4% after a 2.4% gain in the previous quarter, but real hourly compensation still fell 0.1% after a 0.8% decline in the fourth quarter, showing wage growth is still being outpaced by inflation.
Productivity growth was revised up to a 0.3% pace in the fourth quarter from the flat reading previously reported. At the same time, unit labor costs are now up 2.1% in the fourth quarter, compared with the 2.5% gain most recently reported.
