A report released by the Labor Department on Thursday showed labor productivity in the U.S. increased by less than expected in the first quarter of 2024.
The Labor Department said labor productivity rose by 0.3 percent in the first quarter after spiking by a revised 3.5 percent in the fourth quarter.
Economists had expected productivity to climb by 0.8 percent compared to the 3.2 percent surge that had been reported for the previous quarter.
The uptick in labor productivity, a measure of output per hour, came as a 1.3 percent jump in output was largely offset by a 1.0 percent increase in hours worked
Meanwhile, the report said unit labor costs soared by 4.7 percent in the first quarter following a revised unchanged reading in the fourth quarter.
Economists had expected labor costs to shoot up by 3.2 percent compared to the 0.4 percent increase that had been reported for the previous quarter.
“Productivity growth wasn’t strong enough to significantly mitigate the rise in wages last quarter,” said Nationwide Financial Markets Economist Oren Klachkin.
He added, “The strong rise in unit labor costs is another in a string of recent data points indicating that inflation pressures remain relatively high.”
The spike in unit labor costs came as hourly compensation surged by 5.0 percent in the first quarter after jumping by 3.5 percent in the fourth quarter.
Real hourly compensation, which takes changes in consumer prices into account, increased by 1.1 percent in the first quarter after climbing by 0.8 percent in the fourth quarter.
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