Productivity Rebounds While Wage Pressures Ease

MARTIN CRUTSINGER

WASHINGTON (AP) — Productivity rebounded in the first three months of this year while wage pressures eased, both outcomes reflecting America's deep recession.

The Labor Department reported Thursday that productivity, the key ingredient to rising living standards, grew at a 0.8 percent annual rate in the January-March quarter, slightly better than the 0.6 percent increase that economists had expected.

Wage pressures, as measured by unit labor costs, increased at a 3.3 percent rate, higher than the 2.8 percent rise that economists had expected but lower than the 5.7 percent spike in the final three months of last year.

The 0.8 percent rise in productivity in the first quarter was a significant rebound from the final three months of last year, when productivity actually fell by 0.6 percent.

The improvement was a reflection of the massive layoffs that have been occurring as businesses struggle to trim costs to cope with a prolonged recession.

The government reported last week that the economy, as measured by the gross domestic product, contracted at an annual rate of 6.1 percent in the first three months of last year after falling by 6.3 percent in the fourth quarter, the worst six-month performance in a half century. GDP measures the economy's total output of goods and services.