Productivity Steps Up

A 2.2 percent first-quarter increase is a welcome surprise.

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Another economic indicator is unexpectedly on the rise. The Labor Department reported today that nonfarm business productivity increased 2.2 percent in the first quarter, more than economists had expected. It had increased 1.8 percent in the last quarter of 2007.

What's helping productivity grow is that labor costs are rising slower than many expected. They have increased only 0.2 percent since the first quarter of 2007, the least since 2004. One positive take on that statistic is that it eases inflationary pressures. But a key factor contributing to low labor costs is cuts by businesses in workers' hours: The 1.8 percent first-quarter drop in hours worked was the biggest in five years.

Department of Labor