Updated: 05-Jun-25 09:54 ET
| Q1 Productivity-Prel |
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| Updated: 05-Jun-25 09:54 ET |
Highlights
- Q1 productivity decreased 1.5% (Briefing.com consensus -0.8%) versus the preliminary report of a 0.8% decrease.
- Unit labor costs, meanwhile, were revised up to 6.6% (Briefing.com consensus 5.7%) from the preliminary reading of 5.7%.
Key Factors
- The decline in Q1 productivity was the first decline in productivity since the second quarter of 2022.
- From the same quarter a year ago, nonfarm business sector labor productivity increased 1.3% versus the preliminary estimate of 1.4%. Unit labor costs increased 1.9% over the last four quarters versus 1.3% in the preliminary estimate.
- Manufacturing sector labor productivity increased 4.4% versus the preliminary estimate of 4.5%, as output increased 4.8% and hours worked increased 0.4%. Unit labor costs in the total manufacturing sector increased 2.0%, driven by a 6.4% increase in hourly compensation and a 4.4% increase in productivity.
Big Picture
- The combination of declining productivity and the big jump in unit labor costs has stagflation undertones that will complicate the Fed's assessment of the overall economic picture and what to do with its policy rate.
| Category | Q1 | Q4 | Q3 | Q2 | Q1 |
| Nonfarm Business Sector | |||||
| Productivity Q/Q | -1.5% | 1.7% | 2.9% | 2.1% | 1.6% |
| Unit Labor Costs Q/Q | 6.6% | 2.0% | -1.5% | -0.9% | 8.3% |
| Productivity Y/Y | 1.3% | 2.1% | 2.5% | 3.1% | 3.3% |
| Unit Labor Costs Y/Y | 1.9% | 1.8% | 1.6% | 2.3% | 3.4% |