US first-quarter worker productivity, labor costs revised lower

WASHINGTON, June 4 (Reuters) – U.S. worker productivity growth slowed faster than initially thought in the first quarter, but the underlying trend remained strong and a boost is expected from businesses adopting artificial intelligence for many roles.

Nonfarm productivity, which measures hourly output per worker, increased at a downwardly revised 0.3% annualized rate last quarter, the Labor Department’s Bureau of Labor Statistics said on Thursday. That was the slowest since the first quarter of 2025. Productivity was previously estimated to have risen at a 0.8% pace last quarter.

Economists polled by Reuters had forecast productivity growth would be revised down to a 0.5% pace. Productivity grew at a 2.8% rate from a year ago, instead of the 2.9% pace estimated last month. It has grown at a 2.1% rate from the fourth quarter of 2019 through the first quarter of 2026.

The softness in the first quarter was flagged by last week’s downgrade to gross domestic product growth to a 1.6% rate from the previously reported 2.0% pace. Productivity grew at an unrevised 1.6% rate in the October-December quarter.

Economists believe the rising integration of AI will boost productivity and rein in labor costs.

Unit labor costs – the price of labor per single unit of output – increased at a 1.8% rate last quarter. That was a downward revision from the 2.3% pace reported last month. Fourth-quarter growth in unit labor costs was lowered to a 2.1% rate from the previously reported 4.6% pace.

Economists had expected unit labor costs to increase at a 2.5% rate last quarter. They grew at 0.5% rate from a year ago. Hourly compensation increased at a 2.1% rate last quarter and grew at a 3.3% pace from a year ago.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)