US Worker Productivity Falls

The nation's output is slowing despite an increase in hours worked in what is the latest signal of structural weakness for the economy. Productivity fell at an annualized 1.0 percent rate in the first quarter for the 4th decline of the last six months.

Output inched only 0.4 percent higher in the quarter despite a 1.5 percent rise in hours worked. Weak output makes for unwanted increases in unit labor costs which jumped 4.1 percent in the quarter for the largest gain since fourth-quarter 2014.

Trouble in output and productivity reflects what have been declines in spending on capital goods, evident in last week's first-quarter GDP report where the business investment component posted its second straight drop. Employment may be strong but the productive capacity of each additional worker is on the decline.

Recent History Of This Indicator:
Pulled down by low output, non-farm productivity is expected to post a second straight contraction, at minus 1.2 percent in the first quarter vs a 2.2 percent drop in the fourth quarter. Weak output also raises the relative cost of labor as unit labor costs are expected to rise 3.5 percent following the prior quarter's 3.3 percent increase.