US productivity drops for first time in almost 3 years

US labor productivity fell more than expected in Q1 2025, for the first time in nearly three years as economic output declined and work hours increased.

US productivity decreased at a 0.8% annualised rate in the first quarter, after a revised 1.7% increase in the fourth quarter, data from the Bureau of Labour Statistics showed Thursday.

The data revealed a 0.3% decline in non-agricultural sector production for the first time since the second quarter of 2022, while the amount of time employees worked increased 0.6%.

Unit-labor costs, a key measure of wages, jumped 5.7% in the first quarter, the data showed.

Moreover, the annual increase in unit labor costs accelerated to 1.3% in the first quarter, indicating mounting inflationary pressures from wages.