The productivity of US workers fell for the first time in six years during the first three months of the year, as unit labor costs grew at the fastest pace in over three years, the US government said today.
The Labour Department said productivity for industrial workers fell at an annual rate of 0.1 per cent in the first quarter, well below the 2 per cent advance seen during the final three months of last year.
Productivity, measuring the amount of goods and services workers produce per hour, is crucial to rising standards of living. It has fallen steadily since hitting a recent peak of a 6.3 per cent annual gain during the April to June period of last year.
When workers' productivity grows, companies can produce more while holding down costs. Productivity last declined during the first quarter of 1995 when it contracted at an 0.8 per cent annual pace.
Unit labor costs - a key gauge of inflation pressures - soared at a 5.2 per cent annual pace, the largest gain since a 5.5 per cent advance during the October to December period of 1997.
The sharp rise in unit labour costs and drop in productivity may weigh heavily on the US Federal Reserve next week when it mulls whether to cut interest rates further to stoke growth in the flagging American economy.