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US Productivity Was Strongest Since 2014 In The First Quarter

The US worker productivity increased at its fastest pace in more than four years in the first quarter, reducing labor costs and keeping inflation modest.

The Labor Department report released on Thursday closely tracked this week’s data with moderate first-quarter earnings growth and a major inflation measure that saw its lowest annual profit in 14 Months in March.

On Wednesday, the Federal Reserve kept interest rates at a stable level and showed no willingness to change its monetary policy in the near future. Jerome Powell, Fed Chairman told reporters that moderation in price pressure was probably due to transitory factors, and that inflation would return to the US central bank’s 2% target.

Non-farm productivity, which measures hourly production per employee, rose 3.6% on a yearly basis in the last quarter. This is the fastest pace since the third quarter of 2014. The fourth quarter data was revised down to increase productivity by 1.3% instead of the 1.9% previously announced.

Economists questioned by Reuters predicted that productivity would increase by 2.2% in the first quarter. The acceleration in productivity was halted by the sharp increase in gross domestic product between January and March. The economy grew 3.2% in the first three months of the year, after growing by 2.2% in the fourth quarter.

US stock index futures rose after spreading the data before making a profit, while the dollar remained slightly weaker against a basket of currencies. US Treasury bond prices were mixed. The productivity trend is improving. Compared to the first quarter of 2018, productivity increased by 2.4%—the best performance since the third quarter of 2010.

However, some of the segments were impacted in terms of outputs amid trade concerns and regulatory impediments, but key figures have been in favor of the US overall.

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