06-Jun-2025 08:49

Revised data released by the Labor Department on Thursday showed U.S. labor productivity tumbled by much more than previously estimated in the first quarter of 2025.

The Labor Department said labor productivity slumped by 1.5 percent in the first quarter compared to the previously reported 0.8 percent decline.

The much bigger than previously estimated decrease by productivity, a measure of output per hour, largely reflected a much bigger than previously estimated increase by hours worked.

The report said hours worked jumped by 1.3 percent in the first quarter compared to the previously reported 0.6 percent increase, while output edged down by 0.2 percent compared to the previously reported 0.3 percent dip.

The pullback by labor productivity in the first quarter, which marked the first decline since the second quarter of 2022, came following a 1.7 percent surge in the fourth quarter of 2024.

Largely reflecting the downward revision to labor productivity, the Labor Department also said unit labor costs soared by 6.6 percent in the first quarter compared to the previously reported 5.7 percent spike. Economists had expected the jump in unit labor costs to be unrevised.

The upward revision to unit labor cost growth also came as hourly compensation shot up by 5.0 percent compared to the previously reported 4.8 percent surge.

The sharp increase by unit labor costs in the fourth quarter came on the heels of an upwardly revised 3.8 percent jump in the fourth quarter of 2024.

Powered by Commodity Insights