U.S. Productivity Flat in First Quarter

WASHINGTON-U.S. worker productivity was flat in the first quarter, an upward revision from the previous estimate, but still another sign of sluggishness during the eight-year old expansion.

Nonfarm business productivity, measured as the goods and services produced by American workers per hour, was unchanged in the first quarter, the Labor Department said Monday, matching expectations of economists surveyed by The Wall Street Journal.

The government agency had earlier estimated that productivity fell at a 0.6% annual rate in the first quarter.

Compared with a year earlier, productivity rose 1.2% in the first quarter, matching the average annual rate of growth over the past decade, but well below the 2.6% growth rate seen in the early 2000s.

Unit labor costs at nonfarm businesses rose at a 2.2% annual rate in the first quarter, revised down from an initial estimate of 3%. Economists surveyed by the Journal had expected a 2.4% revised pace.

The changes productivity are a critical element in determining the rate of growth for worker pay, consumer prices and the economy as a whole. The robust efficiency gains of the late 1990s and early 2000s, when U.S. firms adopted new advances in information technology, have faded and productivity growth has downshifted dramatically over the past decade.

Weaker productivity is a significant factor that's held back worker wages. Annual wage gains have stayed stuck near 2.5% since late 2015, even though the unemployment rate had fallen to the lowest level in 16 years in May. Weak productivity gains can put pressure on business profits and makes it difficult for employers to justify wage increases.

The Labor Department report on productivity can be accessed at http://bls.gov/lpc.

Write to Sarah Chaney at sarah.chaney@wsj.com and Eric Morath at eric.morath@wsj.com

(END) Dow Jones Newswires

June 05, 2017 08:45 ET (12:45 GMT)