Q1 Productivity-Prel

Updated: 04-Jun-26 09:21 ET

Highlights

• First quarter productivity was revised down to 0.3% ( consensus: 0.8%) from the preliminary estimate of 0.8%.
• Unit labor costs were revised down to 1.8% ( consensus: 2.3%) from the preliminary estimate of 2.3%.

Key Factors

• The increase in productivity was the result of output increasing 1.0% and hours worked increasing 0.7%. From the same quarter a year ago, nonfarm business sector labor productivity increased 2.8%.
• The increase in unit labor costs stemmed from a 2.1% increase in hourly compensation and a 0.3% increase in productivity.
• Manufacturing sector labor productivity increased 3.2%, as output decreased 3.3% and hours worked saw no growth. Unit labor costs in the total manufacturing sector increased 2.2%, driven by a 5.5% increase in hourly compensation and a 3.2% increase in productivity.

Big Picture

• The key takeaway from the report is the understanding that productivity has picked up nicely from a year ago (+2.8%), while unit labor costs (+0.5%) have come down, tempering concerns about labor-based inflation pressures.