Washington, DC, May 6--Productivity rose in the opening quarter of the year even as employers added to payrolls, while new filings for jobless benefits plunged last week to their lowest level in more than three years.
Non-farm business productivity grew at a seasonally adjusted annual rate of 3.5% from January through March, up from a 2.5% rate during the final three months of 2003, the Labor Department said Thursday. In year-on-year terms, the increase was 5.4%.
The numbers, which marked a return to productivity levels seen in the third quarter of 2003, matched Wall Street's expectations precisely.
The Labor Department said the acceleration in productivity in the first quarter partly reflected faster economic growth. The U.S. gross domestic product expanded 4.2% in the first quarter, up a tenth of a percentage point from the fourth quarter of 2003. But workers' hours grew at a slower pace, rising just 1.3% after a 1.6% increase in the fourth quarter.
The acceleration in productivity growth kept the growth of unit labor costs in check. Those costs rose 0.5% in the first quarter after holding steady in the final three months of 2003. In year-on-year terms, however, unit labor costs fell 1.3%. Hourly compensation rose 0.4% in the first quarter, adjusted for inflation.
Manufacturers of durable goods enjoyed the biggest productivity gains during the first quarter, the Labor Department said. Labor productivity among such companies increased 5.9%. Overall, the manufacturing sector saw a productivity gain of 3.1%.
Productivity gains were less impressive in the non-financial corporate sector, which Fed Chairman Alan Greenspan has called a "more accurate" gauge of general productivity trends. The government said productivity in that sector rose 0.5% in the fourth quarter, the latest quarter for which the data is available. That reflected a slowdown from a 3.5% rate in the third quarter.
The number of hours worked by employees of non-financial companies fell by 0.6% while unit labor costs for such companies rose 3.7%.
