WASHINGTON - U.S. worker productivity fell from January through March by the most in a year. Stronger hiring at the start of the year was partly responsible for the drop.
While worker output rose, the number of hours worked increased by an even larger amount. That lowered productivity in the first quarter at an annual rate of 0.5 percent, the Labor Department said Thursday.
Productivity is the amount of output per hour of work. It fell after increasing at an annual rate of 1.2 percent in the October-December quarter.
A decline in productivity could be a positive sign for jobseekers. It could signal that companies are struggling to squeeze more from their work forces and must hire to meet rising demand.
"One reason that employment increased at a faster pace in the first quarter is that firms are finding it harder to improve the efficiency of their existing work forces," said Paul Ashworth, chief U.S. economist at Capital Economics.
The bad news for workers - and good news for companies - is that hourly compensation increased just 1.5 percent, Ashworth noted. That was a key reason labor costs rose at about a 2 percent rate in the first quarter, slower than the 2.7 percent increase in the fourth quarter.
Lower labor costs should eventually help push inflation below the Federal Reserve's target rate of 2 percent, Ashworth noted. That would leave the Fed more room to stick with its plan to keep interest rates near zero at least through 2014.