Productivity growth slows to 2.8 percent gain

MARTIN CRUTSINGER AP Economics Writer

WASHINGTON (AP) - Productivity grew at a slower rate in the first three months of the year than previously thought, a possible sign that businesses are reaching the limits of their ability to boost output with fewer workers.

The Labor Department says productivity advanced at an annual rate of 2.8 percent in the January-March period. That is the slowest pace in a year and much lower than the 3.6 percent that the government initially reported a month ago. Labor costs still declined but at a slower 1.3 percent annual rate instead of the 1.6 percent drop initially estimated.

A slowing in productivity gains could actually be good news for the economy. It would mean that businesses have ended the heavy layoffs that were occurring during the depths of the recession.