US labour productivity misses forecasts, unit labour costs rise 2.3pc

(Sharecast News) - US labour productivity rose at a slower pace in the first quarter, according to preliminary figures from the Bureau of Labor Statistics, with non‑farm business sector productivity increasing 0.8% on an annualised basis, down from a revised 1.6% gain in the final quarter of 2025 and short of the 1.4% expected by economists.

Output grew 1.5% in the period, while hours worked rose 0.7% after a decline at the end of last year.

Manufacturing productivity was notably stronger, rising 3.6% as output increased 3.3% and hours worked fell 0.4%, while durable goods manufacturing posted a 5.3% productivity gain and non-durable manufacturing rose 2%.

On a year‑on‑year basis, productivity was up 2.9% in the first quarter, the strongest reading since the third quarter of 2024.

Elsewhere, unit labour costs increased 2.3% in the quarter, reflecting a 3.1% rise in hourly compensation and the 0.8% productivity gain. Over the past four quarters, unit labour costs were up 1.2%.

Reporting by Iain Gilbert at Sharecast.com