U.S. worker productivity increased slightly in the first quarter after shrinking in the final three months of 2012, the government reported Thursday. Weak productivity growth could prompt employers to hire more if consumers and businesses continue to increase spending. The Labor Department said productivity rose at an annual rate of 0.7 percent in the January-March period, after shrinking 1.7 percent in the previous quarter. Productivity - the amount of output per hour of work - increased in the first quarter because output rose at a faster pace than hours worked. The trend in productivity has been relatively weak in recent years. For all of 2012, productivity rose only 0.7 percent, following a smaller 0.6 percent gain in 2011. The increases were less than half the average growth in 2009 and 2010, shortly after many firms laid off workers to cut costs during the Great Recession. The increases also are below the long-term trend of 2.2 percent annual growth since 1947. With productivity growth slow, companies might have to add workers if demand for their products continues to grow. The U.S. economy expanded at a 2.5 percent annual rate in the first quarter, up from only 0.4 percent in the fourth quarter of 2012. However, economists expect growth to slow in the second and third quarters due to higher pension taxes and sharp government spending cuts.
