MNI DATA IMPACT: US Q1 Productivity +3.6%; ULC -0.9%>

--April 27 Initial Claims Unch at 230,000

--Productivity Rise Largest Since Q3 2014; ULC Drop First Since Q2 2018

By Kevin Kastner, Shikha Dave, and Harrison Clarke

     WASHINGTON (MNI) - Productivity surged by 3.6% in the first 

quarter, the strongest gain in nearly five years, while unit labor costs 

declined by 0.9%, the first drop since the second quarter of 2018, but 

major surprises relative to analyst expectations. 

     Also released at the same time, the level of initial claims was 

unchanged at 230,000 in the April 27 week, compared with expectations 

for a decline after surging in the previous week. 

     Here are some of the key takeaways from the data released Thursday: 

     - The 3.6% gain in nonfarm productivity in the first quarter was 

well above the 1.8% gain expected and follows a downward revised 1.3% 

gain in previous quarter. Productivity was previously reported as up 

1.9% in the fourth quarter. Stronger output growth and slower hours 

worked growth were seen. 

     - The year/year rate for productivity rose to 2.4% from 1.7% in the 

previous quarter, hitting its highest point since the third quarter of 

2013. The year/year rate of growth for unit labor costs slowed to 0.1% 

from 1.2%, the softest pace since the fourth quarter of 2013. 

     - The stronger pace of productivity growth could be an obstacle to 

stronger wage growth and overall inflation going forward. 

     - Initial claims were expected to fall to 209,000 after a surge to 

230,000 in the previous week, so today's data were a surprise that may 

reflect payback from softer weeks in March and early April. In the 

current week, initial claims in New York rose by 6,637, offsetting a 

6,701 drop in claims in Massachusetts after a sharp gain in the previous 

week. 

     - The four-week moving average for claims rose by 6,500 to 212,500 

in the April 27 week and would be expected to rise further next week as 

a 197,000 level rolls out. Continuing claims rose by 17,000 to 1.671 

million in the April 20 week. 

     ** MNI Washington Bureau: 202-371-2121 ** 

[TOPICS: MAUDS$,MT$$$$,M$U$$$,MAUDR$]