Productivity rebounds at solid 5.4% rate in first quarter

WASHINGTON — U.S. productivity posted a sharp rebound between January and March after falling in the previous quarter. Labor costs declined slightly.

Productivity increased at an annual rate of 5.4% in the first quarter, recovering from a 3.8% rate of decline in the fourth quarter of last year, the Labor Department reported today. Labor costs fell at a 0.3% rate in the first quarter following a 5.6% jump in the fourth quarter.

It was the biggest quarterly rise in productivity since an 11.2% surge in the second quarter of last year, a gain that reflected the fact that output was not falling as fast as the labor market was shrinking as millions of people were being laid off in the pandemic.

Productivity is the amount of output per hour of work. The first quarter gain had been expected given that the gross domestic product, the country’s total output of goods and services, had risen by a robust 6.4% rate in the first quarter.