Productivity Growth in U.S. Slowed in First Quarter as Labor Costs Climbed

[Purveyor]

May 5 (Bloomberg) -- The productivity of U.S. workers slowed in the first quarter and labor costs rose as a growing economy prompted companies to boost employment.

The measure of employee output per hour increased at a 1.6 percent annual rate, exceeding the median forecast of economists surveyed by Bloomberg News, after a 2.9 percent gain in the prior three months, figures from the Labor Department showed today in Washington. Expenses per employee climbed at a 1 percent rate after dropping 1 percent the prior quarter.

Companies may need to keep adding staff and increasing hours after reaching the cap of how much efficiency they could extract from their workforces in the early phase of the recovery. A report tomorrow is projected to show employers in the world’s largest economy hired 185,000 additional workers in April.

“We’re moving to the period where companies are starting to hire more workers as they ramp up output, so productivity growth is settling down,” said Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut. “We’re going to see solid but not spectacular gains in employment” in coming months, he said.

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