US nonfarm worker productivity growth in Q1 was revised down to a 0.3% annualized rate, the slowest pace since Q1 2025. Unit labor costs increased at a downwardly revised 1.8% rate. Productivity grew 2.8% year-over-year, while unit labor costs grew 0.5% year-over-year. Q1 GDP growth was revised down to 1.6%.
These revised figures provide a clearer picture of labor market dynamics and inflationary pressures, which are key inputs for the Federal Reserve's monetary policy decisions.
US worker productivity growth slowed more than initially estimated in the first quarter, with nonfarm productivity increasing at a downwardly revised 0.3% annualized rate. This marks the slowest pace since the first quarter of 2025. Unit labor costs, representing the price of labor per unit of output, also saw a downward revision, increasing at an 1.8% rate last quarter. Productivity grew at a 2.8% rate year-over-year, while unit labor costs grew at a 0.5% rate over the same period. Hourly compensation increased at a 2.1% rate last quarter. These figures follow a downgrade in Q1 GDP growth to 1.6%. Despite the slowdown, economists anticipate that the increasing integration of artificial intelligence into business operations will eventually boost productivity and help to control labor costs.