US worker productivity fell at the fastest rate in nearly 75 years
By Alicia Wallace, CNN Business
(CNN) -- US labor productivity tumbled by 7.5% in the first quarter of 2022 -- the largest decline in worker output per hour since 1947, according to Labor Department data released Thursday.
The report also showed that unit labor costs, or how much workers are paid per unit of output, surged by 11.6% during the quarter. That reflects a 3.2% increase in hourly compensation and a 7.5% decrease in productivity.
Analysts polled by Refinitiv had projected a 5.4% decline in productivity and a 9.9% rise in labor costs.
Thursday's data underscores the robust labor market, where competition for workers has pushed up wages as companies try to attract and retain talent. In March, job openings and quits set all-time highs at 11.5 million and 4.5 million, respectively.
At the same time, ongoing supply chain challenges, the pandemic and Russia's invasion of Ukraine have all contributed to surging inflation, which the Federal Reserve is attempting to tamp down by raising interest rates. On Wednesday, the Fed said it would raise its benchmark borrowing rate by 50 basis points.
The US economy shrank last quarter for the first time since 2020, in an abrupt reversal of the previous year's robust economic growth, according to the latest GDP data. That decline was very much related to pandemic supply chain issues distorting inventories and trade data, said Dana Peterson, chief economist for The Conference Board.
"When you get by all that, the US economy is growing healthily," she said.
Anneken Tappe contributed to this story.
This story is developing and will be updated.
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