WASHINGTON -- Worker productivity fell by the largest amount in a year from January through March.
The steeper drop than first estimated suggests companies may need to hire to keep pace with demand.
The Labor Department said Wednesday that productivity fell at an annual rate of 0.9% in the first quarter. That's faster than the 0.5% decline first estimated last month.
Labor costs rose 1.3%, down from an initial estimate of 2%. Compensation costs were smaller.
Productivity is the amount of output per hour of work. It fell at a faster rate than first estimated because revisions showed less output and slightly more hours worked. The government provides two estimates for productivity and labor costs for each quarter.
A decline in productivity could be good news for jobseekers. It could show that companies are struggling to squeeze more output from their workers and must hire to meet rising demand.
But so far, companies have signaled a much different message. Employers added just 69,000 jobs in May, fewest in a year, and just 77,000 in April. That's a sharp decline from the average 226,000 jobs created per month in the first quarter.
Productivity grew last year at the slowest pace in nearly a quarter century after rising sharply in 2010. The main reason productivity soared in 2010 was that it followed the worst recession in decades, when employers laid off millions of workers.
Economists said the trend is typical during and after a recession. Companies shed workers in the face of falling demand and increase output from a smaller work force. Once the economy starts to grow, demand rises and companies eventually must add workers to keep up.
Economists expect productivity growth will remain weak this year. Economists at JPMorgan are forecasting productivity will rise 0.7% this year as companies add workers.