Productivity rose 3.7 percent in the nonfarm business sector during the first quarter of 2006, as output increased 6.5 percent and hours of all persons increased 2.7 percent (table 2). The hours increase was larger than during any quarter in 2005. In fourth-quarter 2005, nonfarm productivity had declined 0.3 percent as output rose 1.5 percent and hours increased 1.8 percent. 

Hourly compensation increased 5.3 percent in the first quarter of 2006. After revision, this measure decreased at a 0.9 percent annual rate in the fourth quarter of 2005--the first decline in nonfarm hourly compensation since 1994, when it fell 0.8 percent in the second quarter and 0.3 percent in the third quarter. When the rise in consumer prices is taken into account, real hourly compensation rose 3.2 in the first quarter and fell 4.1 percent in the fourth quarter. 

Unit labor costs grew 1.6 percent during the first quarter of 2006, following a 0.6-percent decline in the fourth quarter of 2005, as revised. The implicit price deflator for nonfarm business output rose by 2.9 percent in the first quarter of 2006.