FX.co ★ US Q1 Productivity Falls Drops More Than Initially Reported

In the first quarter of 2025, labor productivity within the United States' nonfarm business sector experienced a decline of 1.5%, deviating from the earlier forecasted decrease of 0.8% and following a 1.7% rise in the prior quarter. This marks the first reduction in productivity since the second quarter of 2022, primarily attributed to decreasing output and escalating labor costs. During this period, output fell by 0.2% while unit labor costs soared by 6.6%, even though the number of hours worked climbed by 1.3%. Conversely, the manufacturing sector recorded a robust 4.4% increase in labor productivity, the highest since the second quarter of 2021, with output rising by 4.8% and hours worked by 0.4%. Annually, labor productivity saw a 1.3% increase, slightly lower than the previously estimated 1.4%.