U.S. Productivity Fell in First Quarter by Most Since 2015

(C) Reuters. U.S. Productivity Fell in First Quarter by Most Since 2015

(Bloomberg) — Productivity in the U.S. declined in the first quarter by the most since the end of 2015, as the world’s largest economy shrank faster than employers cut jobs and hours because of the coronavirus pandemic.

Nonfarm business employee output per hour decreased at a 2.5% annualized rate in the first three months of the year, according to Labor Department figures Thursday. The decline matched the median projection in Bloomberg’s survey of economists and followed a 1.2% fourth-quarter increase.

Output fell at a 6.2% annualized rate, while hours worked declined 3.8%. Accounting for productivity, unit labor costs increased at a 4.8% rate after rising at a 0.9% pace in the previous three months.

The record-long U.S. expansion came to an all-but-official end in the first quarter as state governments ordered many businesses to close or operate in limited fashion to prevent the spread of the coronavirus. With sales depressed until the economy opens up, companies will probably continue cutting worker hours in a bid to shore up productivity.

A separate report showed 3.17 million Americans filed jobless claims in the week ended May 2, bringing the total to about 33.5 million since the coronavirus began closing restaurants, factories and offices from coast to coast in mid-March.

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