U.s. First-quarter Worker Productivity Unrevised at 5.4%

Nonfarm productivity, which measures hourly output per worker, increased at an unrevised 5.4% annualized rate last quarter, the Labor Department said. Productivity fell at a 3.8% rate in the fourth quarter. Economists polled by Reuters had expected productivity would be raised to a 5.5% rate.

Productivity shot up early in the pandemic before slumping in the final three months of 2020. Economists attributed the jump to the hollowing out of lower-wage industries, like leisure and hospitality, which they said tended to be less productive.

Compared to the first quarter of 2020, productivity rose at an unrevised 4.1% rate.

Hours worked increased at a 3.0% rate last quarter, revised slightly up from the 2.9% pace estimated last month.

Unit labor costs – the price of labor per single unit of output – increased at a 1.7% rate. They were previously reported to have dropped at a 0.3% pace. Unit labor costs surged at a 14.0% rate in the fourth quarter. They rose at a 4.1% pace from a year ago, instead of at a 1.6% rate as previously reported.

They have also been distorted by the pandemics disproportionate impact on lower-wage industries.

Hourly compensation increased at a 7.2% rate last quarter, rather than the previously reported 5.1% pace. That followed a 9.7% growth pace in the fourth quarter. Compensation increased at an 8.3% rate compared to the first quarter of 2020, revised up from the previously estimated 5.8% pace.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)