WASHINGTON — U.S. nonfarm unit productivity rose at a 2.2% annual rate in the first quarter, slightly ahead of expectations and a faster pace than in the previous quarter, the Bureau of Labor Statistics reported yesterday.
Analysts expected productivity to slow to a 1.7% rate of growth from the previously reported fourth-quarter pace of 1.9%. Fourth-quarter productivity was revised down to a 1.8% rate with the report.
In the first quarter, output growth accelerated modestly to a 0.4% gain from 0.2% in the previous quarter, but hours worked growth slowed further to a 1.8% decline after the 1.6% decline in last year’s fourth quarter. The drop in hours worked was the sharpest since the first quarter of 2003.
Unit labor cost growth decelerated to a 2.2% pace in the first quarter from 2.8% in the previous quarter, due to both the stronger pace of productivity growth and a modest deceleration in compensation growth to 4.4% from 4.6%.
The implicit price deflator accelerated to a 2.2% pace in the first quarter, up from 1.6% in the previous quarter. As a result, real compensation growth actually accelerated to a 0.1% gain in the first quarter after the negative 0.4% pace in the previous quarter.
Year-over-year growth in productivity accelerated to a 3.2% rate, up from 2.9% in the previous quarter and the strongest pace since the second quarter of 2004, when it was 3.8%. Unit labor cost growth, however, decelerated sharply.
— Market News International
