Patrick Semansky/AP
By Lucia Mutikani

WASHINGTON -- U.S. nonfarm productivity fell at its fastest pace in a year in the first quarter as output slowed sharply, leading to a jump in labor-related production costs.

Productivity declined at a 1.7 percent annual rate after advancing at a 2.3 percent pace in the fourth quarter, the Labor Department said Wednesday. It was the biggest drop since the first quarter of 2013.

The fall in productivity, which measures hourly output per worker, was in tandem with a weather-driven sharp weakness in the economy during the January-March period

Manufacturing sector hours fell at a 1.4 percent rate. They had increased at a 3.4 percent pace in the fourth quarter.

Economists polled by Reuters had forecast productivity falling at a 1 percent rate.

First-quarter gross domestic product expanded at a 0.1 percent annual rate, the government said in its advance estimate last week, an abrupt slowdown from the fourth quarter's 2.6 percent rate.

However, subsequent data on March trade, factory orders and construction spending suggest the economy actually contracted in the first three months of the year.

The trend in productivity, however, remains modestly up. Compared to the first quarter of 2013, productivity increased 1.4 percent.

Growth in output braked to a 0.3 percent rate in the first quarter, also the weakest pace in a year. Output had increased at a 3.8 percent rate in the fourth quarter.

Factory output grew at an only 1.8 percent pace, sharply slower than the 4.7 percent rate logged in the fourth quarter.

With overall output slowing sharply because of the adverse weather conditions labor-related production costs jumped.

Unit labor costs, the price of labor per single unit of output, surged at a 4.2 percent rate after falling at a 0.4 percent rate in the fourth quarter. It was the biggest rise in unit labor costs since the fourth quarter of 2012.

Economists polled by Reuters had expected unit labor costs to increase at a 2.6 percent rate. Despite the rise last quarter, there was little sign that wage inflation was igniting.

Unit labor costs rose only 0.9 percent compared to the first quarter of 2013.

A government report last week showed labor costs increased at their slowest pace in more than two years in the first quarter.

Slack in the jobs market is suppressing wage inflation, keeping overall price pressures in the economy benign.

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Brutal winter may see Lake Superior freeze over for first time in decades
Published February 12, 2014

“It’s probably been the toughest winter we’ve had in about 24 years.”

- Robert Lewis-Manning, Canadian Shipowners’ Association

Some 94.7 percent of Lake Superior froze over in 1979, effectively a complete icing. Professor Jay Austin, also of the University of Minnesota's Large Lakes Observatory, said he expects ice coverage to exceed the 20-year-record of 91 percent on the 31,700-square-mile lake before spring. The average thickness of the ice covering Lake Superior is already 10 inches, according to the National Oceanographic and Atmospheric Administration.

Austin said once the water freezes over, it could stay cold well into summer.

“Typically, the lake will start warming up in late June, but it will be August before we see that this year,” Jay Austin told, adding that the “extraordinary cold” has led to ice several feet thick in some parts of the lake.

The all-time record for ice coverage of all the Great Lakes is 94.7 percent in 1979. But Lake Superior, the biggest of the five, is typically the last to ice over. In 1994, the last time it came close, 91 percent of its surface iced over. Lake Erie, conversely, is the shallowest of the lakes and freezes nearly every year.

"It certainly has been a while since we've seen this much ice this early," George Leshkevich, of NOAA's Great Lakes Environmental Research Laboratory, told the St. Paul Pioneer Press.

Forecasters noted that Duluth, Minn., recently experienced 23 consecutive days of subzero temperatures, besting the previous all-time record of 22 days set in 1936 and 1963, according to the National Weather Service.

The Coast Guard is mandated to keep shipping lanes on the Great Lakes open during the 42-week shipping season, which ended last month. This year, the Coast Guard's Great Lakes ice breaker, Mackinaw, worked overtime to cut through the ice for some 57 U.S.-flag vessels that ply the Great Lakes, laden with raw materials such as iron ore and fluxstone for the steel industry, limestone and cement for the construction industry, coal for power generation, as well as salt, sand and grain.

The vessels transport more than 115 million tons of cargo per year, sustain more than 103,000 jobs and have an economic impact of more than $20 billion, according to the Lake Carriers Association.

“It’s probably been the toughest winter we’ve had in about 24 years,” Robert Lewis-Manning, president of the Canadian Shipowners’ Association, recently told Global News. “I think the speed at which the lakes froze this year, and not just the lakes but right up to the St. Lawrence River…was very, very early.”

The shipping season is due to resume in early March.

Meanwhile, across the South on Wednesday, residents awoke to a region encased in ice, snow and freezing rain, as forecasters warned that the worst of a potentially “catastrophic” storm was yet to come. From Texas to the Carolinas to Atlanta, roads were slick with ice, thousands remained without power, and a wintry mix fell in many areas. The Mid-Atlantic region also was expected to be hit as the storm crawled east. Forecasters in several states used unusually dire language in warnings, saying the biggest concern is widespread ice, which could knock out power for days in wide areas.

On the flip side, the lowest ice accumulation across the Great Lakes occurred in 2002, when just 9.5 percent of the surface froze solid.

May 07 2014 at 1:09 PM Report abuse +1 rate up rate down Reply

It is Obama's lousy economy, stupid.

May 07 2014 at 1:04 PM Report abuse +1 rate up rate down Reply