The United States witnessed a decline in labor productivity in the first quarter, marking the first drop in nearly three years. This decline comes as economic output fell, ending a period of continuous efficiency growth that had previously helped mitigate the impact of employment costs on inflation.
According to data released by the U.S. Bureau of Labor Statistics, productivity, measured as output per hour for non-farm employees, decreased at an annualized rate of 0.8%. This follows a revised growth of 1.7% in the fourth quarter of the previous year.
Additionally, unit labor costs, which reflect the cost to businesses of producing a unit of output and are adjusted for productivity, surged by 5.7% in the first quarter. This marks the largest increase in a year, highlighting rising employment costs.
