US productivity slows further in first quarter

WASHINGTON - U.S. worker productivity growth slowed further in the first quarter, but a reversal was likely as businesses invest heavily in artificial intelligence.

Nonfarm productivity, which measures hourly output per worker, increased at 0.8% annualized rate last quarter, the Labor Department's Bureau of Labor Statistics said on Thursday.

Data for the fourth quarter was revised down to show productivity growing at a 1.6% rate instead of the previously reported 1.8% pace. The pace has cooled since the 5.2% surge in the third quarter. Economists polled by Reuters had forecast productivity increasing at a 1.0% rate.

Productivity grew at a 2.9% rate from a year ago. Economists believe the adoption 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 2.3% rate last quarter. Fourth-quarter productivity growth was revised higher to a 4.6% pace from the previously reported 4.4% rate.

Economists had expected unit labor costs to increase at a 2.6% rate last quarter. They grew at a 1.2% rate from a year ago. Hourly compensation increased at a 3.1% rate last quarter and grew at a 4.2% pace from a year ago.

(Reporting by Lucia Mutikani, Editing by Nick Zieminski)

Copyright Reuters or USA Today Network via Reuters Connect.

This story was originally published May 7, 2026 at 8:59 AM.