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U.S. productivity
contracts 0.6 percent in first quarter
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 [June 07, 2016]
WASHINGTON, June 7 (Reuters) - U.S.
nonfarm productivity fell less sharply than previously thought in the
first quarter, but labor-related costs still surged as companies
employed more workers to boost output.
The Labor Department said on Tuesday productivity, which measures hourly
output per worker, contracted at an annualized rate of 0.6 percent,
instead of the 1.0 percent pace reported last month. The revision, which
reflected modestly higher output than previously estimated, was in line
with economists' expectations.
Productivity fell at a 1.7 percent rate in the fourth quarter. The
government last month raised its first-quarter economic growth estimate
to a 0.8 percent rate from the 0.5 percent pace reported in April.
Productivity, which has only increased in two of the last six quarters,
rose at a 0.7 percent rate compared to the first quarter of 2015.
The weakness in productivity partially explains the divergence between
the economy's anemic performance at the start of the year and a fairly
strong labor market, marked by average monthly job gains of 196,000 in
the first quarter.
Productivity increased at a annual rate of less than 1.0 percent in each
of the last five years. This suggests the economy's potential rate of
growth has declined.
The increase in hours worked in the first quarter was unrevised at a 1.5
percent rate.
Unit labor costs, the price of labor per single unit of output,
increased at a revised 4.5 percent pace. They were previously reported
to have advanced at a 4.1 percent rate.
Fourth-quarter unit labor costs were revised to show a 5.4 percent rate
of increase, the fastest rate since the fourth quarter of 2014, instead
of 2.7 percent.
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Jacob Bailey conducts assembly on an SUV chassis at the General
Motors Assembly Plant in Arlington, Texas June 9, 2015. REUTERS/Mike
Stone
Despite the upward revision, the trend in labor cost increases remains moderate.
Unit labor costs increased at a 3.0 percent rate compared to the first quarter
of 2015.
Hourly compensation per hour increased at an upwardly revised 3.9 percent rate
in the first quarter instead of the previously reported 3.0 percent pace.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)
((Lucia.Mutikani@thomsonreuters.com; 1 202 898 8315; Reuters
Messaging: lucia.mutikani.thomsonreuters.com@reuters.net))
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