May 3, 2007 9:15 AM, EDT

Productivity Rises in First Quarter

First-quarter U.S. worker productivity rose 1.7%, the Labor Department said Thursday.

Productivity is a measure of how much an employee produces for every hour of work. The level compared with a revised 2.1% gain in the fourth quarter.

The increase topped economists’ forecasts of a 0.7% rise, Bloomberg reported.

Among manufacturers, productivity rose 2.7% following a 1.9% rate in the fourth quarter.

Labor costs rose at 0.6%, less than forecast, 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.