US labor productivity rises at fastest pace in 2 yrs

US labor productivity advanced at its highest annual rate in two years during Q3 2025, coinciding with falling costs and improved output.

According to data released Thursday by the Department of Labor, labor productivity increased by 4.9% in the third quarter of last year, compared to a 1.9% hike during the same quarter of 2024.

The data showed that unit labor costs fell by 1.9% during Q3 2025, while hourly wages gained 2.9% and productivity improved by 4.9%.

The Bureau explained that unit labor costs are calculated as the ratio of hourly compensation to labor productivity. While rising wages push costs higher, improved productivity helps curb them.