U.S. labor productivity rise more than expected in the first quarter

The preliminary data from the U.S. Labour Department showed on Thursday that nonfarm business sector labor productivity in the United States increased 3.6 percent q-o-q in the first quarter of 2019, as output advanced 4.1 percent q-o-q and hours worked rose 0.5 percent q-o-q (seasonally adjusted). 

That was the strongest increase in productivity since the third quarter of 2014 and was above economists’ forecast for a 2.2 percent q-o-q gain after a revised 1.3 percent q-o-q increase in the fourth quarter of 2018 (originally a 1.9 percent q-o-q surge).

In y-o-y terms, the labor productivity rose 2.4 percent in the first quarter, reflecting a 3.9-percent surge in output and a 1.5-percent increase in hours worked. 

Meanwhile, unit labor costs in the nonfarm business sector in the first quarter fell 0.9 percent q-o-q compared to a revised 2.5 percent q-o-q advance in the prior quarter (originally a 2 percent q-o-q climb). 

Economists had forecast a 1.5 percent gain in first-quarter unit labor costs. 

Unit labor costs quarterly decrease reflected primarily a 2.6-percent increase in hourly compensation and a 3.6-percent advance in labor productivity. 

Compared to the corresponding period of 2018, unit labor costs rose 0.1 percent, the lowest four-quarter rate since a 1.7-percent decline in the fourth quarter of 2013.