U.S. non-farm business sector labor productivity rose at a 1.6 percent annual rate during the second quarter of 2012, following a 0.5-percent decline in the first three months, the U.S. Labor Department said on Wednesday.

The government data revealed that the rise in productivity reflects increases of 2 percent in output and 0.4 percent in hours worked in the April-June quarter of this year.

Unit labor costs in non-farm businesses rose 1.7 percent in the second quarter, while hourly compensation jumped 3.3 percent.

From April to June, U.S. manufacturing sector productivity rose 0.2 percent as output grew 1.7 percent and hours worked increased 1.4 percent. Over the last four quarters, manufacturing productivity gained 2.9 percent.

Productivity measures the amount of output per hour of work. Increasing productivity can slow job creation because it means companies can get more out of their current staff without hiring more workers.