May 5 (UPI) -- Employee productivity in the United States over the first quarter fell 7.5%, its biggest drop since 1947, according to a new report released Thursday by the Labor Department.
Productivity, which the department measures by the output against hours worked in nonfarm jobs, slowed from January to March while labor cost increased by 11.6%. Labor cost over the past 12 months rose 7.2%, its largest increase since 1982.
While Wall Street economists were predicting a productivity drop in the first quarter, they estimated it would only be 5.2%, with labor cost rising 10.5%.
"In the first quarter of 2022, while hours worked surpassed its fourth quarter 2019 level for the first time, output saw its first quarterly decrease since the historic declines in those measures in the second quarter of 2020," the report said.
"The hours worked index is now 0.9% above its fourth quarter 2019 level, the last quarter not affected by the COVID-19 pandemic. The first-quarter 2022 output index is 3.5% above the level seen in the fourth quarter of 2019."
The productivity and costs report said the manufacturing sector labor productivity increased 0.7% in the first quarter and output increased 5.7%, while hours worked increased 5.1%.
The report comes on the heels of the Federal Reserve boosting interest rates one-half percent this week in an effort to slow down sky-high inflation.
After a quarter-point increase at its last meeting in March, the Fed's move increases rates to between 3/4 and 1%. The half-point increase is the largest since 2000.
