Economic Buzz: US labor productivity surges 4.9% in Q3

Labor productivity in the U.S. grew by much more than expected in the third quarter of 2025, according to a report released by the Labor Department on Thursday.

The Labor Department said labor productivity soared by 4.9 percent in the third quarter after spiking by an upwardly revised 4.1 in the second quarter.

The sharp increase in labor productivity, a measure of output per hour, came as output skyrocketed by 5.4 percent and hours worked rose by just 0.5 percent.

Meanwhile, the report said unit labor costs slumped by 1.9 percent in the third quarter after tumbling by a revised 2.9 percent in the second quarter.

Unit labor costs were expected to climb by 0.8 percent compared to the 1.0 percent increase that had been reported for the previous quarter.

The unexpected decrease by unit labor costs came as the surge in productivity more than offset a 2.9 percent jump in hourly compensation.

Real hourly compensation, which takes changes in consumer prices into account, edged down by 0.2 percent during the quarter.

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