WASHINGTON – The productivity of U.S. business and manufacturing workers increased less quickly in the first quarter than previously estimated, according to a report today from the U.S. Department of Labor’s Bureau of Labor Statistics. Output per hour in both sectors was lower than in its May 3 preliminary report, the BLS said.
At non-farm businesses, productivity – a measure of the value produced for each hour of work – rose in the first quarter at an annual rate of 1.0 percent, rather than the 1.7 percent previously reported, the BLS said. The increase matched the median forecast of economists surveyed by Bloomberg News.
Output increased 0.6 percent compared with the fourth quarter of 2006, rather than 1.4 percent of the previous report, while hours worked declined at a rate of 0.4 percent.
Unit labor costs rose at an annual rate of 1.8 percent, slowing from the fourth quarter’s growth rate of 8.9 percent. The revised first-quarter reading surprised analysts, whose median forecast in the Bloomberg survey was 1.3 percent.
Nominal hourly compensation increased at a rate of 2.8 percent, the BLS said. But real hourly compensation – adjusted for inflation – declined 1.0 percent over the quarter, rather than the 1.9 percent previously reported.
In the manufacturing sector, productivity rose by 2.4 percent, rather than the 2.7 percent of the May 3 preliminary report. The change reflected downward revisions to output of both durable and non-durable goods, the BLS said.
Overall manufacturing output increased at a rate of 1.2 percent, revised downward from the initial estimate of 1.5 percent, while hours worked declined at a rate of 1.1 percent.
Unit labor costs increased at an annual rate of 4.5 percent, the BLS said. Nominal hourly compensation increased at a rate of 6.9 percent, while real hourly compensation rose at a rate of 3.0 percent.
(Hours, output and compensation for the manufacturing sector, which accounts for about 12 percent of U.S. business-sector employment, tend to vary more widely than in the broader economy, the BLS noted.)
“There are inflationary pressures coming from the labor market,” said Julia Coronado, a senior economist at Barclays Capital Inc. in New York, whose forecast pegged the gain in labor costs at non-farm businesses. “Along with the downward drift in productivity, this will be a concern for the Fed.”
Additional information, including the 15-page revised first-quarter Productivity and Costs report, is available at www.bea.gov/lpc.
