U.S. Productivity Drops at Fastest Rate Since 2008

American workers are less productive and more expensive than originally estimated, according to a newly revised Q1 Productivity and Costs report (link opens in PDF) released today by the Labor Department.

After first-quarter GDP estimates were revised down from an initial 0.1% growth to 1% contraction last week, analysts had expected tougher times for these two metrics, but their estimates still proved overly optimistic.

For nonfarm business sector labor productivity, an original -1.7% reading dipped down to an annualized -3.2% for Q1, its largest quarter-to-quarter decline since Q1 2008. Analysts had been estimating a smaller 2.9% decline. Productivity suffered from a double-whammy of 2.2% more hours worked, as well as a 1.1% decline in output.

Unit labor costs also took a turn for the worse, increasing at a seasonally adjusted annual rate of 5.7%, instead of the previously published 4.2%. Analysts had been hoping for a middle-line 5.2% bump. 

Source: bls.gov 

Comparing this quarter to Q1 2013, productivity has still squeaked out a 1% improvement as output improved more than hours worked increased, although unit labor costs are up a relatively larger 1.2%.

Discover a top stock pick for 2014
Every year, The Motley Fool's chief investment officer hand-picks 1 stock with outstanding potential. Just click here to download your free copy of "The Motley Fool's Top Stock for 2014" today.

The article U.S. Productivity Drops at Fastest Rate Since 2008 originally appeared on Fool.com.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story