U.S. Q1 non-farm productivity rises 3.6 pct

WASHINGTON, May 6 (BestGrowthStock) – U.S. non-farm productivity
growth slowed sharply in the first quarter, government data
showed on Thursday, suggesting businesses will have to raise
employment to boost output.

The Labor Department said non-farm productivity rose at a
3.6 percent annual rate, the smallest advance in a year, after
expanding at a brisk 6.3 percent pace in the fourth quarter.

Analysts polled by Reuters had forecast productivity, which
measures the hourly output per worker, rising at a 2.5 percent
rate in the January-March period.

Productivity expanded rapidly in the previous three
quarters as businesses wrung more output from a small pool of
labor. Despite the resumption of economic growth, firms have
been reluctant to hire new workers, opting instead to increase
working hours. With productivity slowing, they may need to
start hiring workers to keep production up.

The economy grew at an annual pace of 3.2 percent in the
first quarter slowing from a 5.6 percent inventory-induced
spurt in the fourth quarter.

Total non-farm output grew at a 4.4 percent rate in the
January-March period after a robust 7.0 percent pace in the
fourth quarter, the Labor Department said. Hours worked edged
up at a 0.8 percent rate, the highest since the second quarter
of 2007, from 0.7 percent in the fourth quarter.

Unit labor costs, a gauge of inflation and profit pressures
closely watched by the Federal Reserve, fell 1.6 percent after
dropping 5.6 percent in the fourth quarter.

While the first-quarter decline in unit labor costs was
smaller than the previous quarter, it still pointed to muted
inflation pressures and bodes well for the U.S. central bank’s
pledge to keep interest rates low for an extended period to aid
the economic recovery. Analysts had expected unit labor costs
to fall 0.7 percent in the first quarter
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(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

U.S. Q1 non-farm productivity rises 3.6 pct