WASHINGTON – U.S. nonfarm productivity increased 2.8% in the first quarter, revised lower from the 3.6% gain reported in the preliminary estimate released in May, as output declined and hours worked increased from their initial estimates, the Labor Department reported today.
Unit labor costs fell 1.3% for the quarter, a smaller decline than the 1.6% drop reported in the preliminary estimate last month.
Economists expected productivity to be revised to a 3.4% gain and for unit labor costs to be revised to a 1.4% drop, according to the median estimate from Thomson Reuters.
Output was revised to a 4.0% increase and hours worked increased 1.1% in the first quarter. Labor productivity is measured by dividing an index of real output by an index of hours worked.
Hourly compensation was revised lower to a 1.5% increase from the 1.9% rise initially reported. Unit labor costs record the ratio of hourly compensation to labor productivity. Increases in hourly compensation tend to increase unit labor costs and increases in output per hour then to reduce them.
From the first quarter of 2009 to the first quarter of 2010, productivity increased 6.1%, the largest gain over four quarters since 2002.
Fourth quarter 2009 productivity was unrevised at a 6.3% increase. Unit labor costs in the fourth quarter fell 7.8%, larger than the 5.6% decline initially reported.
