Productivity rocketed at US companies in the second quarter, hitting its highest point in almost six years as businesses slashed overheads and squeezed more labour out of their shrinking workforces.

The Labor Department said that non-farm productivity jumped by an annual rate of 6.4 per cent in the April to June quarter, up from a revised 0.3 per cent in the first three months of the year.

Economists had expected a 5.5 per cent rise in productivity, which is a measure of output per hour worked.

Productivity last had a big jump in the third quarter of 2003 with an increase of 9.7 per cent.

Employers have slashed the number of hours worked by US workers by cutting overtime and shift work and finally by laying off staff. About 6.7 million Americans have lost their jobs since the recession started in December 2007.

Companies also cut overheads such as sales and marketing, human resources and training. At the same time, the remaining staff worked harder. As a result, productivity rocketed.

The Labor Department also said that unit labour costs, which is the cost of the labour needed to produce a product, dropped by 5.8 per cent in the second quarter - the biggest quarterly fall since the second quarter of 2000 - as a result of rocketing productivity.

Although compensation for workers increased slightly, by 0.1 per cent, in the second quarter, productivity increased by much more, which pushed down unit labour costs.

Rising productivity usually leads to higher living standards because it means that companies can pay their workers more but in the economic downturn, employers have used the extra cash raised by increased productivity to bolster their balance sheets.

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