US Q1 unit labour costs surge

Measured US labour productivity tumbled at the start of 2025, as a surge in imports led to a drop in aggregate demand.

According to the Department of Labor, in seasonally adjusted terms, non-farm labour productivity shrank at a quarterly annualised pace of 0.8% during the first quarter (consensus: -0.4%).

That was the result of 0.6% growth in the number of hours worked even as output dropped by 0.3% from the previous quarter.

In turn, output was dragged down by a surge in net imports as Americans tried to front-run trade tariffs.

Unit labour cost growth meanwhile accelerated to a clip of 5.7% (consensus: 5.3%), in comparison to the 2.0% pace rate of gain observed in the fourth quarter.