Economists polled by Reuters had forecast that non-farm productivity, which measures hourly output per worker, would gain 2.5 percent in the second quarter. The second-quarter increase was down from a 2.6 percent rise in productivity during the first three months of this year.
Compared with the second quarter of 2007, non-farm productivity was up 2.8 percent. That was down from 3.3 percent growth in the first quarter on a year-over-year basis.
The department said that output grew in the second quarter by 1.7 percent, nearly double the 0.9 percent rise posted in the first quarter. But worker hours were cut back by 0.5 percent after being trimmed 1.6 percent in the first quarter this year.
Unit labor costs, a gauge of inflation and profit pressures closely watched by the Federal Reserve, were up 1.3 percent in the second quarter. That was significantly lower than the revised 2.5 percent increase registered in the first three months this year.
Meanwhile, U.S. wholesale inventories rose a much greater-than-expected 1.1 percent in June, while strong petroleum and machinery sales helped pushed a measure of how long it would take to sell current stocks to a record low, a Commerce Department report showed Friday.
Wall Street analysts polled by Reuters were expecting inventories to rise 0.6 percent in June, compared with a 0.9 percent gain in May previously reported as 0.8 percent.
The inventory-to-sales ratio, a measure of how long it would take to sell stocks at the current sales pace, dropped to a record low 1.06 months in June as wholesale sales rose 2.8 percent, the biggest increase since March 2004.
U.S. petroleum sales rose 12.7 percent in June to nearly $70 billion, the biggest increase since April 2002 and up sharply from June 2007 when sales totaled $41.6 billion. U.S. petroleum stocks increased 8.3 percent in June.
Durable goods inventories rose 0.6 percent in June, led by a 4.2 percent gain in stocks of metals, the report said. Non-durable goods inventories of products such as paper, drugs, clothing and petroleum rose 1.8 percent.