U.S. labor productivity increases more than expected in Q1

The preliminary data from the U.S. Labour Department showed on Thursday that nonfarm business sector labor productivity in the United States rose 5.4 percent q-o-q in the first quarter of 2021, as output surged 8.4 percent q-o-q and hours worked increased 2.9 percent q-o-q (seasonally adjusted). This was better than economists’ forecast for a 4.3 percent q-o-q advance after a revised 3.8 percent q-o-q drop in the fourth quarter of 2020 (originally a 4.2 percent q-o-q decline).

In y-o-y terms, the labor productivity jumped 4.1 percent in the first quarter, reflecting a 1.1-percent gain in output and a 2.9-percent fall in hours worked.

Meanwhile, unit labor costs in the nonfarm business sector in the first quarter edged down 0.3 percent q-o-q compared to a revised 5.6 percent q-o-q climb in the prior quarter (originally a 6.0 percent q-o-q surge). Economists had forecast a 0.8 percent drop in first-quarter unit labor costs.

Unit labor costs quarterly decline reflected a 5.1-percent q-o-q jump in hourly compensation and a 5.4-percent rise in productivity.

Compared to the corresponding period of 2020, unit labor costs rose 1.6 percent, as hourly compensation increased 5.8 percent and productivity grew 4.1 percent.