Last updated: May 4, 2023 at 8:47 am ET
Initial publication: May 4, 2023 at 8:43 am ET
The numbers: US productivity fell 2.7% annually in the first quarter, the government said on Thursday.
Economists polled by the Wall Street Journal had forecast a 1.9% decline.
In the past four quarters, productivity in the US has fallen by 0.9%.
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The payment: US productivity fell 2.7% annually in the first quarter, the government said on Thursday.
Economists polled by the Wall Street Journal had forecast a 1.9% decline.
In the past four quarters, productivity in the US has fallen by 0.9%.
Key data: Production rose 0.2% in the first quarter. Hours worked increased by 3%.
Real US gross domestic product grew at an annual rate of 1.1%, a sharp decline from fourth-quarter growth of 2.6%.
Unit labor costs, a key measure of wages, rose to 4.5% in the first quarter from 3.3% in the previous three months. Over the past 12 months, unit labor costs have increased by 5.3%.
Big picture: Productivity is a key indicator because it is a prerequisite for rising living standards. But it’s hard to measure, and economists like to look at longer-term trends. The work of identifying productivity trends has been made even more difficult by COVID.
“Since the pandemic, productivity numbers have been extremely volatile as output growth and job gains have been out of phase,” said Stephen Stanley, Santander’s chief US economist.
Economists focus heavily on unit labor costs, as economists’ wages are a key driver of inflation. Labor costs are accelerating much faster than would be consistent with price stability, suggesting a Federal Reserve pause could be brief.
Market reaction: Shares
DJIA
SPX
should open lower on Thursday. The yield on the 10-year government bond
TMUBMUSD10Y
rose to 3.59%.
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