1Q productivity falls; labor costs up

WASHINGTON (AP) — U.S. productivity fell in the first quarter while labor costs rose, reflecting the economic slowdown caused at the start of the year by harsh winter weather.

The Labor Department says productivity declined at an annual rate of 1.7% in the January-March period, after growing at a 2.3% rate in last year's fourth quarter.

The falling productivity coupled with a slight increase in hourly compensation led to labor costs rising 4.2% in the first quarter. Labor costs had fallen in the previous two quarters.

Economic growth stalled in the first three months of this year, increasing just 0.1%, according to initial estimates by the Commerce Department. The economy might even have shrunk during the first quarter, many economists said Tuesday after the release of March trade data.