Revised government figures show U.S. productivity in the first quarter wasn’t as weak as originally reported but still turned in the worst performance since the second quarter of last year.
The Labor Department said Monday that nonfarm productivity, which measures hourly output per worker, was unchanged in the January-March quarter after rising at a 1.8% annual rate in the fourth quarter.
It was previously reported to have declined at a 0.6 percent annualized pace in the first quarter. The revision was in line with economists’ expectations.
Productivity has been increasing at a sluggish 1.2% annual rate since the recovery from the Great Recession began eight years ago clip, well below the 2.1% average from 1947 to 2016 or the 2.6% average from 2000 to 2007.
“The slowdown in productivity helps explain slower increases in worker pay and a stagnant standard of living, among other things,” MarketWatch noted.
According to Reuters, “Economists blame low capital expenditure, which they say has resulted in a sharp drop in the capital-to-labor ratio, for the weakness in productivity. There are also perceptions that productivity is being inaccurately measured, especially on the information technology side.”
The revised first-quarter figure mostly reflected an increase in output — the amount of goods and services companies produce — from 1.7% from 1%. The amount of hours employees worked was revised to a slightly higher 1.7% gain instead of 1.6%.
“Companies have been hiring more workers to maintain output,” Reuters noted.
Total hours worked increased at a rate of 1.7%, up from the previously reported 1.6%, while unit labor costs, the price of labor per single unit of output, increased at a 2.2% pace instead of the previously reported 3.0% rate.
The labor cost figures, MarketWatch said, suggest companies are continuing to keep costs down despite a steadily expanding economy and growing shortages of skilled labor. Over the past year, costs have advanced 1.1%, well below the historic 2.8% average since the end of World War Two.