Key facts
- Nonfarm productivity rose at a 3.6% annualized rate in the third quarter, above the 2.8% forecast in a Reuters poll.
- The second-quarter productivity figure was revised up to a 2.1% rate from a previously reported 1.4%.
- Unit labor costs fell at a 0.7% rate, the first decline since the second quarter of 2025.
- Productivity grew at a 2.1% rate from a year earlier, and unit labor costs grew at a 2.4% rate from a year earlier.
- The Fed left its benchmark overnight interest rate in the 3.75%-4.00% range the previous week.
US worker productivity grew faster than expected in the third quarter, the Labor Department's Bureau of Labor Statistics said on November 5, pushing unit labor costs lower.
Nonfarm productivity, which measures hourly output per worker, rose at a 3.6% annualized rate in the quarter, the bureau said. Economists polled by Reuters had forecast a 2.8% rate. The second-quarter figure was revised up to 2.1% from a previously reported 1.4%. Measured against a year earlier, productivity grew at a 2.1% rate.
Unit labor costs, the price of labor per single unit of output, fell at a 0.7% rate, the first decline since the second quarter of 2025. That followed an upwardly revised 1.9% growth pace in the second quarter. Economists polled by Reuters had forecast a 0.6% rise, after a previously reported 1.2% gain. Labor costs grew at a 2.4% rate from a year earlier.
The figures followed data last week showing a moderate increase in the Employment Cost Index, the broadest measure of labor costs, in the third quarter. Economists and policymakers have argued the jobs market was not a source of inflation, and the report said slower wage growth gives the Federal Reserve more latitude to focus on price pressures stemming from the US-Israeli war with Iran.
The Fed left its benchmark overnight interest rate in the 3.75%-4.00% range the previous week while saying inflation "remains elevated." Economists expect the Fed to raise borrowing costs in December, according to the report.