1Q Productivity Up 1%

New York, NY, June 6, 2007--Productivity grew at an annual rate of 1 percent in the first quarter, down from the 1.7 percent pace reported in May according to a report from the Labor Department.

A measure of labor costs rose at a 1.8 percent rate, three times the 0.6 percent rate initially reported.

Economists were looking for an increase of 1 percent in first quarter productivity.

Unit labor costs, which are adjusted for efficiency gains, were projected to rise at a 1.3 percent pace.

Hours worked fell at a 0.4 percent pace last quarter, the biggest drop in almost four years, compared 0.3 percent decline initially reported and a 0.8 percent gain the previous three months. Output rose at a 0.6 percent rate last quarter, the smallest increase since the last three months of 2002.

Among manufacturers, productivity rose at a 2.4 percent rate in the first quarter, after increasing at a 1.9 percent rate the prior three months. Productivity at non-financial corporations, a measure watched by the Fed, rose at a 0.6 percent rate.

For all of last year, productivity rose 1.6 percent, the smallest increase since 1995. Labor costs in 2006 rose 3.3 percent, the most in six years.