The productivity of American workers dropped at the fastest pace in a year in the first quarter, the Labor Department reported Wednesday, underscoring how difficult it has become for U.S. businesses to squeeze more work out of current staffing levels.
Non-farm productivity decreased at a 0.9 percent annual pace in January through March. That's faster than the initial estimate of an annual rate of decline of 0.5 percent and the consensus estimate of economists polled by Reuters who were expecting productivity to decline at a 0.7 percent rate.
Productivity grew rapidly as the economy emerged from the 2007-09 recession. The gains were driven by companies' cutting costs, particularly for labor.
But businesses might be finding it hard to squeeze more output from the existing pool of labor, and productivity has declined in three of the last five quarters. Some Federal Reserve officials, including Chairman Ben Bernanke believe companies drastically cut their workforces and are now seeking an alignment with the expected demand for their products.
In the first quarter, the productivity report showed output rose at a 2.4 percent annual rate and hours worked climbed at a 3.3 percent rate. Unit labor costs grew at a 1.3 percent rate.
Reuters and The Associated Press contributed to this report.