The numbers: The productivity of American workers increased by an annual rate of 0.2% in the first quarter, according to a revised report released by the government on Thursday. Initially, the increase was reported as 0.3% last month.
Economists surveyed by the Wall Street Journal had anticipated no change in productivity for the first quarter.
This modest gain is a significant drop from the average 2.8% growth rate seen over the four quarters of 2023.
Key details: The output, or the total goods and services produced, was weaker than initially reported, with the increase adjusted down to 0.9% from 1.3%.
The growth rate of hours worked was also revised down slightly to 0.6% from the initial 1% estimate.
Unit labor costs were revised to show a 4% increase, down from the previously forecasted 4.7%, which is still much higher than the 2.8% decrease in the fourth quarter.
Big picture: The decrease in productivity is attributed to last week’s downward revision of GDP growth.
Economists predict productivity will improve later this year as businesses seek labor-saving measures to counteract rising wages that reduce profit margins.
The significant rise in compensation in the first quarter indicates that inflation pressures remain.
Market reaction: On Thursday, stocks (DJIA and SPX) were expected to open mixed, while the 10-year Treasury yield (BX:TMUBMUSD10Y) rose to 4.310% in early trading.
