Economists voice worry as US labour costs trend higher in Q1

What has traditionally been the most closely-watched indicator of wage pressures in an economy rose past forecasts for the first quarter in the US, triggering concern among some economists.

Non-farm unit labour costs in the States increased at an annual pace of 3.0% during the first three months of 2017, according to the Bureau of Labor Statistics.

That came about as workers' nominal hourly compensation increased by 2.4% even as their productivity declined by 0.6%.

Economists had penciled in a 2.5% rise in labour costs alongside flat productivity growth.

The biggest advance in labour costs was the 3.4% rise in business.

In comparison to a year ago, labour costs were 2.8% higher and productivity ahead by 1.1%.

Ian Shepherdson, chief economist at Pantheon Macroeconomics was troubled by the rise in labour costs, explaining how they tend to 'lead' gains in core consumer price inflation.

Nonetheless, the economist did expect productivity to rebound over the next quarter.

The four-quarter average year-on-year rise was continuing to trend higher, he pointed out. It was at 2.5% in the first quarter, up from 2.5% one year ago and higher still than the 1.3% rise observed two years ago.

"These are miserable-looking numbers, though they are subject to endless, and potentially large, revisions. The trend in productivity growth is about +0.6%, and we expect a clear rebound, along with GDP growth, in the second quarter."