The articles reporting on first quarter productivity told us that it was better than it expected, coming in at a 1.7 percent annual rate. Count me among the surprised. I was expecting a number close to 0.5 percent based on 1.4 percent growth in output and a 1.0 percent increase in hours worked.
The Bureau of Labor Statistics now reports that hours worked fell at a 0.3 percent annual rate in the first quarter. This is possiible given their methodology, because BLS takes hours for the self-employed from the Current Population Survey, and this data is extremely erratic. As a practical matter, it is not likely that hours actually fell at a 0.3 percent rate in the quarter, and it would not be good news if they did. Look for a sharp jump in reported hours in the second quarter and a very weak productivity number.
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