US productivity beats forecasts

Analysts are trying to see which way the US economy is going.

US workers were more productive than many analysts had forecast during the first three months of the year, figures from the Labor Department have shown.

Productivity, or the total output per hour of work, rose at an annual rate of 2.2% in the quarter, the report said.

Analysts had expected an increase of closer to 1.5%, and said the gains came as firms cut back on worker hours.

At the same time, the cost of labour rose by 2.2%, slower than the increase in the previous three months.

'Positive'

"If production is rising and employment falling then productivity has to rise," said Tom Sowanick of Clearbrook Financial.

"It is the only silver lining in what otherwise is a dark inflation cloud."

Doug Roberts, chief investment strategist at Channel Capital Research, said the latest productivity figures were "positive on the inflation front".

"It gives [the Federal Reserve] a little bit more leeway and actually bodes well for the future core inflation numbers."