U.S. Q1 productivity growth rate revised upwardly from preliminary estimate

The pace of U.S. productivity growth was upwardly revised for the first quarter to 0.0 percent sequentially from the preliminary estimate of -0.6 percent. But, this continues to be a noticeable deceleration as compared with productivity growth in the earlier two quarters:1.8 percent in fourth quarter and 3.3 percent in the third quarter.

Growth in nonfarm business output mainly drove revision. Nonfarm business output was upwardly revised to 1.7 percent. Meanwhile, real compensation per hour was revised down slightly to -0.9 percent, the second straight quarter of negative growth. Unit labor costs growth was revised down to 2.2 percent from 3 percent.

On a year-on-year basis, productivity was up 1.2 percent, slightly higher than the rate recorded in the second quarter and an evident rebound from early 2016. However, productivity growth continues to be subdued by historical standards. Trend productivity growth has been especially weak in recent years and has reached historically low levels. On the contrary, growth in unit labor costs have been rising and combined with slow growth in output prices, unit profits for firms have been squeezed in recent years.