Revised Q1 productivity number looks better than expected

Nonfarm business sector labor productivity decreased 0.9 percent in the first quarter 

of 2020, the U.S. Bureau of Labor Statistics reported today, as output decreased 6.5 

percent and hours worked decreased 5.6 percent. (All quarterly percent changes in this 

release are seasonally adjusted annual rates.) From the first quarter of 2019 to the 

first quarter of 2020, productivity increased 0.7 percent, reflecting no change 
in output and a 0.7-percent decrease in hours worked. 

Unit labor costs in the nonfarm business sector increased 5.1 percent in the first 

quarter of 2020, as hourly compensation increased 4.2 percent and productivity 

decreased 0.9 percent. Unit labor costs increased 1.9 percent over the last four 

quarters. (See table 2.) BLS calculates unit labor costs as the ratio of hourly 

compensation to labor productivity. Increases in hourly compensation tend to increase 
unit labor costs, and increases in output per hour tend to reduce them.