By Nathalie Voit

Nonfarm labor productivity declined at its fastest pace in over seven decades to start the year, the Labor Department reported in an economic news release on May 5.

Labor productivity, or output per hour, sank by 7.5% in the first quarter of 2022 as output fell 2.4% and hours worked increased 5.5%. According to the  Bureau of Labor and Statistics, the decline was the largest since the third quarter of 1947.

Productivity slid 0.6% year-over-year, its largest four-quarter decline since the last quarter of 1993.

The fall-off in productivity arrives amid soaring labor costs. Unit labor costs in the nonfarm business sector surged 11.6% in the first three months of 2022 as productivity declined 7.5%, but hourly compensation rose 3.2%. The bureau said that unit labor costs spiked 7.2%, the largest four-quarter increase in costs since the third quarter of 1982.

The dismal productivity data is reflective of a shrinking economy. In the first quarter of the year, U.S. gross domestic product (GDP) fell at an annual pace of 1.4%, the Commerce Department reported on April 28. The decrease was the first time GDP contracted since the early days of the COVID-19 pandemic.

Various factors drove the stunt in economic growth including the war in Ukraine, ongoing inflation, and a rising coronavirus caseload. According to the Reuters COVID-19 tracker, the country has reported 160 infections per 100,000 people over the last seven days.