First-Quarter Productivity Improves

First-quarter U.S. worker productivity improved at an 0.8% annual rate in the first quarter, the Labor Department said Thursday.

Economists had predicted a 0.6% increase, Bloomberg reported. Productivity is a measure of how much an employee produces for every hour of work.

Labor costs rose at a rate of 3.3%, after climbing 5.7% in last year’s fourth quarter, Bloomberg said.

When worker efficiency improves at a slower pace and labor becomes more expensive, companies may raise prices in order to guard their profits, contributing to more rapid inflation.