U.S. productivity grew at an annual rate of 3.2 percent in the January-to-March quarter this year, rebounding from a fall of 0.3 percent in the previous quarter, the Labor Department reported on Thursday.

The pickup in productivity, the amount an employee produces for every hour on the job, was stronger than the 2.8 percent growth rate that analysts had been expecting.

The rebound in productivity reflected a brisk 4.8 percent advance in overall economic activity in the first quarter of this year, following a feeble 1.7 percent rise in the previous quarter, according to analysts.

Productivity is the key factor in boosting living standards because it allows companies to pay their workers more based on their increased efficiency without having to resort to raising the prices of their products, which would increase inflation.

However, the downside of that increased efficiency is that companies, by gaining more output from their existing work force, are able to avoid hiring new workers.

Meanwhile, the report showed that hourly compensation in the first quarter rose at a 5.7 percent rate, compared with the 2.7 percent growth rate in the previous quarter.

Since hourly compensation grew faster than productivity during the first quarter, unit labor costs, an important measure of inflationary pressure, went up at a 2.5 percent pace.

Employee compensation includes wages and salaries as well as benefit costs, which includes items such as health insurance and pensions.

Source: Xinhua