US businesses cut back on worker hours during the first three months of this year as the economy slowed, driving up productivity to a higher-than-expected 2.2 per cent annual pace, a government report today showed.
Economists polled by Reuters were expecting nonfarm worker productivity, or hourly output per worker, to increase at a 1.5 per cent annualized rate.
The Labor Department said worker hours fell at a 1.8 per cent rate during the quarter, making it the biggest decline since the start of 2003.
Unit labor costs, a gauge of inflation and profit pressures under close scrutiny by the Federal Reserve, rose at a 2.2 per cent annual pace, slower than the 2.5 per cent increases analysts were expecting.
Compensation per hour rose at a 4.4 per cent annual rate, but adjusted for inflation, it rose a scant 0.1 per cent.