US worker productivity declines in first quarter

Reuters

Thu, May 8, 2025, 5:50 AM 2 min read

WASHINGTON (Reuters) -U.S. idiosyncratic productivity dropped successful the archetypal 4th for the archetypal clip successful astir 3 years, resulting successful a surge successful labour costs that could compression margins for businesses astatine a clip erstwhile they are facing rising costs from tariffs.

Nonfarm productivity, which measures hourly output per worker, fell astatine a 0.8% annualized complaint past quarter, the Labor Department's Bureau of Labor Statistics said connected Thursday. That was the archetypal diminution since the 2nd 4th of 2022 and followed an upwardly revised 1.7% maturation gait successful the October-December quarter.

Economists polled by Reuters had forecast productivity declining astatine a 0.7% gait pursuing a antecedently reported 1.5% maturation rate. Productivity grew astatine a 1.4% complaint from a twelvemonth ago.

The driblet successful productivity was flagged by the government's precocious gross home merchandise study for the archetypal 4th published past week, which showed the system contracting astatine a 0.3% annualized rate, the archetypal diminution successful 3 years.

The system was swamped by a flood of imports arsenic businesses rushed to bring successful goods earlier President Donald Trump's tariffs kicked in. The sweeping tariffs, including 145% duties connected Chinese imports, are seen raising costs for businesses.

Unit labour costs - the terms of labour per azygous portion of output - jumped astatine a 5.7% complaint successful the archetypal 4th aft rising astatine a downwardly revised 2.0% complaint successful the October-December. Economists had forecast labour costs accelerating astatine a 5.1% complaint aft advancing astatine a antecedently reported 2.2% pace.

Labor costs accrued astatine a 1.3% complaint from a twelvemonth ago.

Hourly compensation changeable up astatine a 4.8% complaint aft advancing astatine 3.7% gait successful the anterior quarter. It grew astatine a 2.7% complaint from a twelvemonth ago. The labour marketplace is slowing and is not regarded by policymakers arsenic a important root of inflation.

The Federal Reserve connected Wednesday kept it benchmark overnight involvement complaint successful the 4.25%-4.50% range, but said it "judges that the risks of higher unemployment and higher ostentation person risen." The U.S. cardinal slope has a 2% ostentation target.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)