Key facts
- US nonfarm productivity growth revised down to 0.3% annualized rate in Q1.
- Unit labor costs increased at a downwardly revised 1.8% rate in Q1.
- Productivity grew 2.8% year-over-year, while unit labor costs grew 0.5% year-over-year.
- Hourly compensation increased 2.1% last quarter.
- Q1 GDP growth was revised down to 1.6%.
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.