By Carlos Torres Washington, Aug. 9 (Bloomberg) -- The productivity of U.S. workers rose at twice the expected pace in the second quarter as a slowing economy prompted companies to reduce worker hours, a government report showed. The Labor Department's measure of how much work is performed by one person in an hour rose at a 1.1 percent annual pace from April to June, following an 8.6 percent surge in the first three months of the year. Second-quarter productivity was 4.7 percent higher than it was in the same three months last year, the strongest gain since 1983. Companies have responded to a slowing economy by reducing hours for a fifth straight quarter to help shore up profit margins. Cisco Systems Inc. is one company striving for efficiency gains. Productivity ``is one of the best indicators of economic performance and profits,'' said Adrienne Warren, a senior economist at Scotia Capital Inc. in Toronto. ``If firms can produce more per worker, that is going to help profits and the standard of living.'' Economists had expected productivity to grow at a 0.6 percent annual rate, based on the median of 59 forecasts in a Bloomberg News survey. The slowdown in second-quarter productivity from the prior three months was due to cooler economic growth. The economy expanded at one-fifth the pace of the first three months as consumer spending slowed. Labor Costs Unit labor costs, or the amount paid to workers for each unit of production, rose at a 2.4 percent annual rate, after falling 4.6 percent in the first quarter. Economists expected unit labor costs to rise at a 2.5 percent annual rate. Productivity grew a revised 1.1 percent last year, down from a previously estimated 1.8 percent. The government also revised 2000 productivity to a 2.9 percent gain from 3.3 percent. The statistics reflect revisions in gross domestic product announced last week. While productivity tends to be erratic from quarter to quarter as economic growth accelerates and slows, it averaged 2.3 percent a year from 1996 to 2001. That compares with the 1.4 percent average of the previous 25 years. Companies responded to slowing demand last year by cutting payrolls faster than production, making remaining employees more efficient. Combined with the benefits from new equipment and technology purchased in the last decade, productivity growth is expected to continue in coming years, economists and Federal Reserve officials said. Greenspan ``Despite the recent depressed level of investment expenditures, the productivity of the U.S. economy has continued to rise at a remarkably strong pace,'' said Fed Chairman Alan Greenspan in testimony before Congress last month. ``The magnitude of the recent gains would not have been possible without ongoing benefits from the rapid pace of technological advance and from the heavy investment over the latter half of the 1990s in capital equipment.'' In the second quarter, hours worked fell at a 0.7 percent annual pace after a 2.2 percent rate of decline in the first quarter. Output increased at a 0.5 percent rate from April through June, following a 6.2 percent jump in the previous three months. ``Employers are doing more with less,'' said Christopher Low, chief economist at FTN Financial, an arm of First Tennessee Bank, in New York. Productivity at U.S. manufacturers rose at a 4.9 percent annual rate in the second quarter after rising at a 9.7 percent rate. Productivity at non-financial corporations, a measure watched by the Fed, rose at a 5.1 percent pace in the first quarter. That number lags the other productivity data by a quarter. Cisco Cisco, the world's largest maker of equipment to link computers, said this week that fiscal fourth-quarter earnings soared in part because of rising worker productivity. Revenue per employee, their measure of how productive employees are, rose 22 percent to $540,000 at an annual rate over the last four quarters, the company said. The San Jose, California- based company is targeting revenue of $700,000 per worker. Cisco is designing more products so that they share common technology and software, looking to improving efficiency. Employees are being asked to ``focus on their contribution and on how they can add value,'' said John Chambers, Cisco's chief executive officer, in an interview this week. Greenspan and his colleagues at the Fed have said that productivity will keep inflation in check while the economy rebounds. That's one reason eight out of 22 economists at the biggest bond dealers on Wall Street say that slowing growth poses a greater risk to the economy than inflation. The shift from their current neutral stance is expected to be announced following their meeting on Tuesday. Four of the economists forecast a rate cut before yearend. The economy grew at a 1.1 percent annual pace from April to June, down from 5 percent in the first three months of the year, the latest Commerce Department figures show.