U.S. labor productivity decreases less than initially estimated in the first quarter

The revised data from the U.S. Labour Department showed on Thursday that nonfarm business sector labor productivity in the United States decreased 0.9 percent q-o-q in the first quarter of 2020, as output fell 6.5 percent q-o-q and hours worked dropped 5.6 percent q-o-q (seasonally adjusted). That was better than initial estimate of a drop of 2.5 percent q-o-q and economists’ forecast for a decline of 2.7 percent q-o-q. In the fourth quarter of 2019, labor productivity rose 1.2 percent q-o-q.

In y-o-y terms, the labor productivity rose 0.7 percent, reflecting no change in output and a 0.7-percent decline in hours worked.

Meanwhile, unit labor costs in the nonfarm business sector in the first quarter climbed 5.1 percent q-o-q compared to an initial estimate of a 4.8 percent q-o-q advance and a revised 2.2 percent q-o-q gain in the prior quarter (originally a 0.9 percent q-o-q advance). That was the biggest increase in labor costs since the first quarter of 2019.

Economists had forecast a 5.0 percent q-o-q surge in first-quarter unit labor costs.

Unit labor costs quarterly increase reflected a 4.2-percent q-o-q growth in compensation per hour and a 0.9-percent q-o-q decline in productivity.

Compared to the corresponding period of 2018, unit labor costs rose 1.9 percent.