US more productive than expected

The figures will calm fears of a slowdown in the US economy

US productivity grew more than expected in the first three months of the year, but wages rose by less than forecast.

Productivity, which measures how much a worker can produce in an hour, rose by 1.7%, the Labor Department reported.

Analysts had been expecting productivity to rise by a smaller 1% during the quarter.

Meanwhile, labour costs increased by just 0.6%, well below the 4% analysts had forecast and the 6.2% seen in the final quarter of 2006.

The data will be good news for the US Federal Reserve, which has been worried that falling productivity could push up wages.

Although the recent productivity increase was slightly higher than expected, it represented a slowdown compared with the final quarter of last year, which saw a revised 2.1% rise.

Separately, the number of people filing claims for US unemployment benefits fell by 21,000 last week to 305,000, the lowest level since mid-January, official figures showed.