US business productivity at the start of the year was a bit stronger than first thought, the government said today, but labour costs rose at a swift 3.3% annual rate, well ahead of expectations.
A separate report showed temporary car industry layoffs helped push initial claims for jobless benefits up by a sharper-than-expected 25,000 last week.
The US Labour Department said business productivity increased at a 2.9% pace in the first quarter, an upward revision from an initially reported 2.6% gain.
But worker compensation was also moving ahead quite a bit faster than reported a month ago, leading to large upward adjustments to unit labour costs, a key inflation pressure gauge that measures labour costs for any given unit of production.
The 3.3% rise in first-quarter unit labour costs followed an even faster 7.7% fourth-quarter clip, the biggest gain since the first quarter of 2000 and well ahead of the initially reported 1.7% advance.
Wall Street economists had expected first-quarter productivity growth to be revised up to a 3% pace from the initially reported 2.6% rise, but believed unit labour costs would be marked down to a 2% advance from a 2.2% increase.
