US productivity fell in first quarter while labor costs up

[Omaha Steve]

Source: AP

MARTIN CRUTSINGER

WASHINGTON (AP) — U.S. worker productivity declined more sharply in the first three months of the year than previously thought while labor costs rose more quickly.

Productivity fell at a 3.1 percent rate in the first quarter, a bigger drop than the 1.9 percent decline estimated a month ago, the Labor Department reported Thursday. Labor costs rose at a 6.7 percent rate in the first quarter, faster than 5 percent rise first estimated.

The economy hit a soft-patch in the winter with the overall economy, as measured by the gross domestic product, actually contracting in the January-March quarter. But economists believe growth and productivity is rebounding. Still, productivity, the amount of output per hour of work, has been weaker in recent years and economists are split on the reasons why.

Yet they had anticipated Thursday's numbers given last week's report which revised down the performance of the overall economy, as measured by the gross domestic product, in the first quarter.

FULL story at link.


Read more: http://bigstory.ap.org/article/e95a6c52d9384eb19ca4bda63761867b/us-productivity-fell-first-quarter-while-labor-costs

[on point]

1. Time to drastically reduce executive pay in order to lower labor costs

[groundloop]

2. ^^^ YES - how the hell they can justify their cost is beyond me

[Kelvin Mace]

3. Is it just me

or does it seem like I see an econ story every other day which contradicts the previous story. One day things are great, the next story says its terrible.

[whatthehey]

4. Hmmm... this could start to get problematic for hiring if it continues

Businesses are sitting on lots of cash, but the incentive to spend it on labor when it costs more but produces less is not exactly inspiring.