According to the Labor Department, non-farm productivity fell at an annual pace of 0.1 percent in the first quarter, helping send unit labor costs soaring at a 5.2 percent annual rate. That is the largest jump in labor costs in more than 3 years. In the fourth quarter of 1997, labor costs increased 5.5 percent.

The first quarter drop in productivity was well below the 2 percent gain seen in the final 3 months of 2000. Productivity increases have been steadily smaller since hitting a peak of 6.3 percent during the second quarter of 2000.

REPLY 216