U.S. nonfarm output plunged the most in a year in the first three months of the year, causing labor-related production expenses to rise.
Productivity fell at an annual rate of 1.7 percent after earlier surging 2.3 percent in the final three months of 2013, reported the Labor Department on Wednesday. The decline in productivity, which analyzes the hourly output per employee, followed a similar pattern with the other economic sectors due to the harsh winter weather.
The decrease was also the biggest such since the first three months of last year. Hours in the manufacturing sector plunged 1.4 percent after earlier accelerating 3.4 percent in the fourth quarter. A Reuters survey of economists had predicted the productivity to decline by 1.0 percent.
The government in its flash reading indicated last week that gross domestic product in the first quarter expanded at 0.1 percent, down from 2.6 percent in the fourth quarter.
Nonetheless, March’s economic data suggests that the economy is starting to accelerate after the winter lull.
Output increased at 0.3 percent in the first quarter, down from 3.8 percent in the fourth quarter. Factory output rose at 1.8 percent, lagging the 4.7 percent growth rate recorded in the fourth quarter. Labor productivity costs increased due to the decline in the overall output as a result of extreme weather conditions.
Unit labor costs, which measures the labor cost per each unit of output, rose 4.2 percent after earlier declining 0.4 percent in the final three months of 2013. It was also the steepest increase in labor costs per unit since the last quarter of 2012. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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