Updated: 08-May-25 09:17 ET
| Q1 Productivity-Prel |
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| Updated: 08-May-25 09:17 ET |
Highlights
- Nonfarm business sector labor productivity decreased 0.8% in the first quarter (Briefing.com consensus -0.4%), with output down 0.3% and hours worked up 0.6%. That was the first decline in productivity since the second quarter of 2022.
- Unit labor costs surged 5.7%, reflecting a 4.8% increase in hourly compensation and a 0.8% decrease in productivity.
Key Factors
- From the same quarter a year ago, nonfarm business sector labor productivity increased 1.4%. Unit labor costs increased 1.3% over the last four quarters.
- Manufacturing sector labor productivity increased 4.5%, as output decreased 5.1% and hours worked increased 0.5%. Unit labor costs in the total manufacturing sector increased 1.6%, driven by a 6.2% increase in hourly compensation and a 4.5% increase in productivity (versus 0.8% previously).
Big Picture
- The key takeaway from the report is the jump in unit labor costs stemming from the weak productivity, although the first-quarter earnings reports in aggregate have not conveyed any strong profit margin pressures as a result of higher labor costs.
| Category | Q1 | Q4 | Q3 | Q2 | Q1 |
| Nonfarm Business Sector | |||||
| Productivity Q/Q | -0.8% | 1.7% | 2.9% | 2.1% | 1.6% |
| Unit Labor Costs Q/Q | 5.7% | 2.0% | -1.5% | -0.9% | 8.3% |
| Productivity Y/Y | 1.4% | 2.1% | 2.5% | 3.1% | 3.3% |
| Unit Labor Costs Y/Y | 1.4% | 1.8% | 1.6% | 2.3% | 3.4% |