American workers are less productive and more expensive than originally estimated, according to a newly revised Q1 Productivity and Costs report (link opens in PDF) released today by the Labor Department.

After first-quarter GDP estimates were revised down from an initial 0.1% growth to 1% contraction last week, analysts had expected tougher times for these two metrics, but their estimates still proved overly optimistic.

For nonfarm business sector labor productivity, an original -1.7% reading dipped down to an annualized -3.2% for Q1, its largest quarter-to-quarter decline since Q1 2008. Analysts had been estimating a smaller 2.9% decline. Productivity suffered from a double-whammy of 2.2% more hours worked, as well as a 1.1% decline in output.

Unit labor costs also took a turn for the worse, increasing at a seasonally adjusted annual rate of 5.7%, instead of the previously published 4.2%. Analysts had been hoping for a middle-line 5.2% bump. 


Comparing this quarter to Q1 2013, productivity has still squeaked out a 1% improvement as output improved more than hours worked increased, although unit labor costs are up a relatively larger 1.2%.

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