American first-quarter productivity demonstrates the fastest surge tempo since 2014

In the first quarter, American worker productivity managed to rally at the fastest tempo for over four years, thus depressing labor costs and also suggesting that inflation could stay benign for a while.

As the Labor Department informed, on Thursday, nonfarm productivity, gauging hourly output per worker, went up at a 3.6% annualized rate in the last quarter. It turned out to be the strongest tempo since the third quarter of 2014.

The fourth quarter’s data was updated downwards to demonstrate productivity soaring at a tempo of 1.3% versus the previously posted 1.9% outcome.

Market experts interviewed by Reuters had hoped that first-quarter productivity would head north at a 2.2% rate.

The acceleration in productivity was marked by a leap in GDP surge in the January-March period.

For the first three months of 2019, the American economy rallied at a 3.2% rate having expanded at a 2.2% tempo in the fourth quarter.

In general, the trend in productivity is definitely getting better. In contrast with the first quarter of last year, US productivity surged at a rate of 2.4% that appears to be the best performance since the third quarter of 2010.

The firm tempo of productivity put pressure on surge in labor costs, which is a potential driver of corporate gains. The price of labor per single unit of output, unit labor costs headed south at a 0.9% in the first quarter having soared at a 2.5% rate in the previous quarter.

In contrast with the first quarter of last year, labor costs went up at a 0.1% rate that appears to be the weakest tempo since the fourth quarter of 2013.