The FINANCIAL — U.S. worker productivity fell in the opening months of 2015, the latest sign of sluggish economic growth at the start of the year, according to Nasdaq.
The productivity of nonfarm workers, measured as the output of goods and services per hour worked, decreased at a 1.9% seasonally adjusted annual rate in the first quarter, the Labor Department said on May 6. From a year earlier, productivity was up 0.6%.
Economists surveyed by The Wall Street Journal had forecast a 1.8% decline from the prior quarter.
Productivity dropped in the first quarter as output declined at a 0.2% pace and hours worked rose at a 1.7% rate.
A gauge of compensation costs, unit labor costs, increased at a 5% annual rate in the first three months of the year. Economists had expected a 4.3% rise.
From a year earlier, unit labor costs rose 1.1%.
Productivity data can be volatile from quarter to quarter and are often heavily revised. Productivity fell at a 2.1% rate in the fourth quarter, initially reported as a 1.8% drop.
While the statistics have shortcomings, overall trends have been unimpressive.
Productivity has now fallen for two consecutive quarters, the first time that’s happened since 2006.
More broadly, productivity has been trending lower for years. Between 1995 and 2004, U.S. labor productivity growth averaged 2.9% per quarter. In the following decade, productivity growth averaged just 1.4% per quarter, according to Labor Department data.
That may be one reason overall economic growth has been constrained and wage growth has been tepid. Strong productivity gains can underpin corporate profits, allow more business investment and support higher wages.
The slowdown in productivity has puzzled officials at the Federal Reserve, though some have held out hope it will improve.
“I believe that the enormous gains in human welfare that the information technology explosion seems to be generating are likely to continue, and will perhaps eventually return measured productivity growth to its long-run historical pace,” Fed Vice Chairman Stanley Fischer said in a March speech.
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