WASHINGTON (Reuters) – U.S. employee productiveness fell at its steepest tempo since 1947 within the first quarter, whereas progress in unit labor prices accelerated, the federal government confirmed on Thursday, indicators that sturdy wage features will possible persist and contribute to inflation staying uncomfortably excessive for some time.

Nonfarm productiveness, which measures hourly output per employee, tumbled at a 7.3% annualized price final quarter, the deepest for the reason that third quarter of 1947, the Labor Division stated on Thursday. That was an upward revision to the 7.5% tempo of decline estimated final month.

Productiveness grew at a 6.3% price within the fourth quarter.

Economists polled by Reuters had anticipated that the lower in productiveness can be unrevised at a 7.5% price.

Productiveness fell at an unrevised 0.6% tempo from a yr in the past.

Massive shifts within the composition of the workforce within the wake of the COVID-19 pandemic have made it more durable to measure underlying productiveness progress, which some economists put at about 1.0% or much less, making the Federal Reserve’s combat in opposition to inflation tough.

“The issue for the Fed is that sturdy productiveness progress helped hold unit labor value progress low within the late Nineties and within the years simply earlier than COVID hit,” stated Steve Englander, head of North America macro technique at Customary Chartered (OTC:) Financial institution in New York. “If underlying productiveness progress is lower than 1% as we suspect, wages would wish to develop beneath 3% to be consistent with a 2% inflation goal.”

Hours labored elevated at a 5.4% price within the first quarter, revised up from the beforehand reported 5.5% tempo.

Unit labor prices – the value of labor per single unit of output – accelerated at a 12.6% price. That was revised up from the 11.6% progress tempo reported in Might and adopted a 3.9% enlargement price within the October-December quarter.

Unit labor prices elevated at an 8.2% price from a yr in the past, as an alternative of the 7.2% tempo estimated final month. An acute scarcity of staff is boosting wage progress. There have been 11.4 million job openings on the finish of April.

Hourly compensation rose at a 4.4% price within the first quarter, revised up from the beforehand estimated 3.2% tempo. Compensation elevated at a 7.6% price in comparison with the primary quarter of 2021. It was beforehand estimated to have elevated at a 6.5% tempo.