U.S. firms and their workers were not more productive in the
first quarter. But they weren’t less productive, either.
WASHINGTON (MarketWatch) — The productivity of American
companies and their employees wasn’t as bad in the first
quarter as originally reported.
The government on Monday said productivity was unchanged in the
first three months of 2017 instead of declining at a 0.6%
The biggest change: The increase in output, or how many goods
and services companies produce, was raised to 1.7% from 1%.
The amount of hours employees worked, meanwhile, was revised to
a slightly higher 1.7% gain instead of 1.6%.
The updated figures show that labor costs rose more slowly than
initially reported, a sign companies continue to keep costs
down despite a steadily expanding economy and growing shortages
of skilled labor.
Unit-labor costs rose a revised 2.2% vs. the prior 3% reading.
Over the past year unit-labor costs have advanced 1.1%, well
below the historic 2.8% average since the end of World War Two.
The closely follow measure reflects how much it costs a
business to produce one unit of output, such as a ton of coal,
a ream of paper or a bushel of wheat.
Hourly compensation — pay and benefits — rose a revised 2.2% in
the first quarter, but after adjusting for inflation workers
actually lost ground. Real compensation fell 0.9%.
The upward revision in the first quarter doesn’t change the
underlying weakness in productivity, the key to a higher
standard of living.
Productivity rises when workers supply more goods and services
in the same amount of time. Since an economic recovery began
eight years ago, productivity has been increasing at 1.2%
annual clip. That’s well below the 2.1% average since from 1947
to 2016 or the 2.6% average from 2000 to 2007.
The slowdown in productivity helps explain slower increases in
worker pay and a stagnant standard of living, among other
There’s been much debate about why productivity is weak and how
it can be raised, but little consensus on what can be done
aside from somehow encouraging businesses to invest more.
All figures reflect seasonally adjusted annual rates.
In premarket trading, futures markets pointed to a a lower
opening for the Dow Jones Industrial Average