Productivity Soft, Output Slows, Labor Costs Increase

Productivity was once again soft, up at an annualized rate of 0.7 percent in the first quarter with labor costs well ahead at a 2.7 percent rate. Output slowed in the quarter, to a 2.8 percent rate of growth from 3.7 percent in the fourth quarter, but hours worked also declined, to 2.1 from 3.3 percent. Compensation rose in the quarter to a 3.4 from 2.4 percent rate with inflation-adjusted compensation, however, still in the negative column at minus 0.1 vs the fourth-quarter's minus 0.8 percent rate. A vital sign for the economy, productivity has been modest at best through the length of the ongoing expansion.