Productivity Level Rises 1.6% in First Quarter

First-quarter U.S. worker productivity improved at an annual rate of 1.6% in the first quarter, twice the level originally reported, the Labor Department said Thursday.

An earlier Labor report a month ago estimated the rate at 0.8%. Economists had predicted a 1.2% increase, Bloomberg reported.

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

Among manufacturers, productivity fell at a 2.7% rate, less than the 4.6% decline at the end of last year.

Labor costs rose 3%, less than the 3.3% originally reported but down from the 5.1% increase in the fourth 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.