Tuesday, May 26th14.5°C
26426
26319

US productivity dropped at 1.7 per cent rate in first quarter as labour costs rose

WASHINGTON - U.S. productivity fell in the first quarter while labour costs rose, reflecting the economic slowdown caused at the start of the year by harsh winter weather.

The Labor Department said Wednesday that productivity declined at an annual rate of 1.7 per cent in the January-March period, after growing at a 2.3 per cent rate in last year's fourth quarter.

"Special factors, namely the weather, are to blame," said Jennifer Lee, a senior economist at BMO Capital Markets.

The falling productivity coupled with a slight increase in hourly compensation led to labour costs rising 4.2 per cent in the first quarter. Labor costs had fallen in the previous two quarters.

Economic growth stalled in the first three months of this year, increasing just 0.1 per cent, according to initial estimates by the Commerce Department. Freezing temperatures and snow storms disrupted growth. Retail sales and factory output plunged in January, only to recover as the weather warmed.

The economy might even have shrunk 0.6 per cent during the first quarter, the research firm Marcoeconomic Advisers said Tuesday after the release of March trade data.

Productivity measures output per hour of work. Greater productivity should raise living standards because it enables companies to pay their workers more without having to increase prices, which could boost inflation.

Despite the increase in labour costs last quarter, overall inflation remains mild.

The Federal Reserve tracks productivity and labour costs when setting interest rate policies. Fed officials have attempted to spur growth by keeping short-term interest rates at record lows, while at the same time, purchasing bonds to try to keep long-term rates down as well.

Since December, however, the Fed has reduced its monthly bond-buying to $45 billion from $85 billion.

But the Fed is committed to holding down short-term rates for an extended period, saying that it expects to maintain those rates "well past" the time that unemployment dipped below its previous threshold of 6.5 per cent.

The unemployment rate fell in April to 6.3 per cent from 6.7 per cent, a sign that economic growth should rebound in the second quarter.

The Canadian Press


Read more Business News

26416


Recent Trending




Today's Market
S&P TSX15187.40-13.36
S&P CDNX700.09-3.39
DJIA18232.02-53.72
Nasdaq5089.36-1.43
S&P 5002126.06-4.76
CDN Dollar0.8102-0.0019
Gold1205.70+1.40
Oil60.56-0.11
Lumber273.80+3.70
Natural Gas2.844-0.043

 
Okanagan Companies
Pacific Safety0.14+0.01
Knighthawk0.010.00
QHR Technologies Inc1.49+0.01
Cantex0.03-0.01
Anavex Life Sciences0.425+0.053
Metalex Ventures0.08-0.01
Russel Metals25.83+0.04
Copper Mountain Mining1.33-0.05
Colorado Resources0.105+0.005
ReliaBrand Inc0.0048-0.0049
Sunrise Resources Ltd0.04+0.01
Mission Ready Services0.17-0.00
Decisive Dividend Corporation2.20+0.60

 



26401

FEATURED Property
22981604855 Swallow Court
3 bedrooms 4 baths
$1,999,000
more details
image2image2image2
Click here to feature your property
Please wait... loading


Cash stressed seniors

Photo: Thinkstock.comFor many Canadian homeowners, their house represents the biggest portion of their net worth. Now, increasing numbers of seniors are starting to recognize the hidden value of their...


Do or do not

Photo: Thinkstock.com“The optimist sees the rose and not its thorns; the pessimist stares at the thorns, oblivious of the rose.” - Kahlil Gibran Good planning is all about managing chan...


Penetrate the smokescreen

Photo: ContributedHas this ever happened to you? You’re in the middle of your second or third “good discussion” with a prospect. Everything’s going great. The prospect seems en...

_





26418


Member of BC Press Council


24843