Productivity cooled in the United States in the first quarter of 2012, signaling that companies may hire workers at a slower rate with labor costs continuing to rise.
The Bureau of Labor Statistics reported that productivity dropped at a 0.9 percent annual rate. In the last quarter of 2011, productivity rose by 1.2 percent. In May, payroll gains were the weakest they have been in 12 months, according to Bloomberg.
"If demand remains weak, employers will push the existing work force harder to boost productivity," said Brian Jones, senior economist at Societe Generale, in an interview with Bloomberg. "We think you're going to see slower growth, and the breadth of hiring, at least according to purchasing managers, is the weakest it's been since last December."
However, manufacturing productivity rose at a rate of 5.2 percent, the most it has gained since the third quarter of 2011, according to Bloomberg.