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U.S. productivity posts biggest decline since 1947 in first quarter -Breaking

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© Reuters. Building staff assemble a scaffold at a job website, as section certainly one of reopening after lockdown begins, in the course of the outbreak of the coronavirus illness (COVID-19) in New York Metropolis, New York, U.S., June 8, 2020. REUTERS/Brendan McDermid

WASHINGTON (Reuters) – U.S. employee productiveness fell at its steepest tempo since 1947 within the first quarter, whereas progress in unit labor prices accelerated, indicating that rising wage pressures will proceed contributing to retaining inflation elevated for some time.

Nonfarm productiveness, which measures hourly output per employee, plunged at a 7.5% annualized price final quarter, the deepest because the third quarter of 1947, the Labor Division mentioned on Thursday. Knowledge for the fourth quarter was revised barely decrease to indicate productiveness rising at a 6.3% price as a substitute of the beforehand reported 6.6% tempo.

Economists polled by Reuters had anticipated productiveness would drop at a 5.4% tempo. The decline was flagged in final week’s first-quarter gross home product report, which confirmed the economic system contracting at a 1.4% price within the January-March interval.

Productiveness fell at a 0.6% tempo from a yr in the past. It has been risky because the begin of the COVID-19 pandemic greater than two years in the past.

Hours labored elevated at a 5.5% price within the first quarter after rising at a 2.5% tempo within the fourth quarter.

Unit labor prices – the worth of labor per single unit of output – shot up at an 11.6% price. That adopted a 1.0% progress tempo within the October-December quarter. Final quarter’s leap seemingly exaggerates the tempo of progress in labor prices.

Unit labor prices elevated at a 7.2% price from a yr in the past. The surge in prices adopted on the heels of a authorities report final week exhibiting that compensation for American staff notched its largest improve in additional than three many years within the first quarter amid a persistent labor scarcity.

There have been a report 11.5 million job openings on the finish of March. The Federal Reserve on Wednesday raised its coverage rate of interest by half a share level, the most important hike in 22 years, and mentioned the U.S. central financial institution would start trimming its bond holdings subsequent month because it battles sky-high inflation. Fed Chair Jerome Powell instructed reporters that “the labor market is extraordinarily tight, and inflation is way too excessive.”

Hourly compensation rose at a 3.2% price within the first quarter after rising at a 7.4% tempo within the fourth quarter. Compensation elevated at a 6.5% price in comparison with the primary quarter of 2021.

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