May 7, 2014 8:35 AM, EDT
Productivity of Workers Declines in First Quarter
Natalie Behring/Bloomberg News

The measure of employee output per hour dropped at a 1.7% annualized rate, the weakest reading in a year, after rising at a 2.3 % pace in the last three months of 2013, the Labor Department reported.

The median forecast in a Bloomberg News survey of 59 economists called for a 1.2% drop. Unit labor costs climbed at a 4.2% rate, more than estimated.

The pullback in productivity came as snow and unusually cold weather covered much of the United States, depressing economic activity as consumers stayed indoors and companies put off investment plans.

“The quarterly figures can be volatile, and lower productivity in the first quarter just reflects the fact that overall economic activity was disrupted by a variety of temporary factors, including the severe winter weather,” said Ryan Wang, an economist at HSBC Securities USA Inc. “GDP growth and productivity should make up for some of that weakness in the second quarter.”

Over the past year, productivity increased 1.4%, the same as in the 12 months ended in December.

Manufacturers fared better than the economy as a whole, with worker productivity increasing at a 3.3% rate.