WASHINGTON — U.S. first-quarter non-farm productivity was revised to a 2.6% increase and unit labor costs were revised to a 2.2% gain, reflecting some improvement, and there was no surprise as gross domestic product for the quarter was revised slightly higher.
The numbers were each reported up 2.2% in the previous estimate.
Manufacturing productivity was 3.6% higher, slower than originally reported, as output was revised down by more than hours, which are the most volatile components, reflecting the immediate adjustments in production schedules to sales.
Overall hours were down 1.8% but manufacturing hours plunged 4.7% in the first quarter as the sector took the brunt of adjustment in a slowing economy.
A more compelling story is told by the change over the year in each of the statistics: non-farm productivity is up 3.3% and unit labor costs up just 0.7%. That slowing in costs can be expected to continue as the economy stalls along with wages, resulting in gains in output per worker.
Hourly compensation was up 4.9% in the first quarter after the revisions, down from the 6.6% rise in the fourth quarter, another illustration that costs are being contained. Real hourly compensation was up just 0.6%.
A bottom line is that the data are as expected and consequently probably not market-moving.
— Market News International
