Q1 Productivity gains lower than first reported

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By The Staff

WASHINGTON (AP) — Productivity grew at a slower rate in the first three months of the year than previously thought, a sign that businesses may be reaching the limits on how much they can squeeze out of leaner staffs.

The Labor Department says productivity advanced at an annual rate of 2.8 percent in the January-March period. That is the slowest pace in a year and lower than the 3.6 percent rate the government initially reported last month.

Labor costs declined at a 1.3 percent annual rate, slower than the 1.6 percent drop initially estimated.

A separate report Thursday showed layoffs fell for a second straight week. They dipped by 10,000 to 453,000 last week. Still, the declines come after a sharp increase three weeks ago and claims remain at elevated levels.

A slowing in productivity gains could mean fewer layoffs are coming.

The downward revision in productivity reflected the government's revised estimate of total output as measured by the gross domestic product. GDP was revised to show the economy growing at a 3 percent rate in the first quarter, down from an initial estimate of 3.2 percent.

Less output translated into slower growth in productivity, which is a measure of the amount of output per hour of work.

The first-quarter rise in productivity was the smallest increase since a 0.9 percent gain in the first quarter of 2009. Productivity soared in final three quarter of 2009, growing 6.3 and 7.8 percent for the rest of the year.