Worker production fell 7.5% in the first quarter, the biggest drop since 1947
People work at the Rivian Automotive electric vehicle plant in Normal, Illinois on April 11, 2022.
Kamil Krzaczynski | Reuters
Worker productivity fell to start 2022 at its fastest pace in nearly 75 years while labor costs soared as the United States battled a surge in Covid cases, a the Bureau of Labor Statistics reported Thursday.
Non-farm productivity, a measure of output relative to hours worked, fell 7.5% from January to March, the biggest drop since the third quarter of 1947.
At the same time, unit labor costs climbed 11.6%, bringing the increase over the past four quarters to 7.2%, the largest increase since the third quarter of 1982. measurement calculates how much employers pay workers in wages and benefits per unit of output. .
Wall Street was already expecting a 5.2% drop in productivity and a 10.5% increase in unit labor costs. On a four-quarter basis, productivity fell 0.6%, the biggest drop since the fourth quarter of 1993.
Taken together, the numbers underscore the surge in inflation in the United States, which has seen prices rise to the fastest level in more than 40 years. Federal Reserve officials announced on Wednesday that they would raise interest rates by half a percentage point as part of an ongoing effort to control inflation.
A separate report from the Labor Department on Thursday showed jobless claims rose to 200,000 for the week ended April 30, a gain of 19,000 from the previous period and above the Dow Jones estimate of 182. 000.
Continuing claims, which are a week behind the overall figure, fell by 19,000 to 1.38 million, the lowest level since January 17, 1970.
The productivity data reflects a quarter in which various factors converged to drive a 1.4% decline in the rate of economic growth as measured by gross domestic product.
Rising Covid cases, runaway inflation and Russia’s invasion of Ukraine have hampered activity, although most economists expect growth to pick up later in the year. Fed Chairman Jerome Powell said at his press conference after the meeting on Wednesday that he still sees the United States in a strong position, although inflation must be brought under control if the recovery is to remain strong.