(Adds financial market movements and background)
WASHINGTON, June 6 (Reuters) - U.S. nonfarm productivity
fell more than expected in the first quarter as companies gave
more hours to employees but only modestly expanded output,
revised data from Labor Department showed on Wednesday.
Productivity slipped at a 0.9 percent annual rate, a sharper
decline than the 0.5 percent initially reported by the
Analysts polled by Reuters had expected productivity to
decline at a 0.7 percent rate during the period.
Employers slashed payrolls during the 2007-09 recession,
helping fuel a spike in productivity. But the increase in
output-per-hour faded last year, and productivity has declined
in three of the last five quarters.
U.S. stock index futures were up on speculation the European
Central Bank could act on the euro zone debt crisis. The euro
pared gains against the dollar, while U.S. government debt
prices were steady at lower levels.
Economists are divided about what recent weakness in
productivity will mean for the economy.
One the one hand, it could show that employers are squeezing
about all they can out of their current staffs and will need to
But there is also a darker possibility: It could be a sign
that the burst in hiring that began last year will continue to
Some economists think employers went overboard laying people
off during the recession, and last year's acceleration in hiring
reflected the slowdown in productivity growth.
Some Federal Reserve officials, including Chairman Ben
Bernanke believe companies are now seeking an alignment with the
expected demand for their products. Without stronger economic
growth, they argue, the pace of hiring will be hard to sustain.
In the first quarter, the productivity report showed output
rose at a 2.4 percent annual rate and hours worked climbed at a
3.3 percent rate. Unit labor costs grew at a 1.3 percent rate.
(Reporting by Jason Lange; Editing by Neil Stempleman)
© 2023 Thomson/Reuters. All rights reserved.