Ahead of the Bell: Productivity and Labor Costs

Via FORBES

WASHINGTON -- Worker productivity, the key ingredient to rising living standards, likely grew at a faster pace in the first quarter than the government previously estimated, while labor costs increased less.

Productivity, the amount of output per hour of work, is expected to increase at an annual rate of 1.2 percent in the January-March period, according to economists surveyed by Thomson Reuters. That's up from the government's estimate of 0.8 percent last month and much better than the 0.6 percent drop in last year's fourth quarter. The Labor Dept. is scheduled to release the report at 8:30 a.m. EDT.

Higher productivity is crucial for rising living standards because workers that produce more can earn higher wages without forcing companies to raise prices.

Productivity grew in the first quarter even as economic output plummeted, because the number of hours worked fell even faster. The government estimated in May that nonfarm business output fell by 8.2 percent in the first quarter, while hours worked fell by 9 percent.

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