Productivity Continues to Increase

U.S. workers’ productivity rose at an annual rate of 3.6% in the first quarter, the smallest in a year, Labor Department said Thursday.

Productivity rose 6.3% in the past 12 months, the biggest such increase in 48 years, Labor said.

Productivity is a measure of how much an employee produces for every hour of work.

The first-quarter level was higher than economists’ forecasts of a 2.6% annual rate, Bloomberg reported.

Among manufacturers, productivity rose at a 2.5% rate. Labor costs at factories fell 6.1% from the first quarter of last year.

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.