Economic Buzz: US labor productivity growth slows in Q4

Labor productivity in the U.S. surged by much more than expected in the fourth quarter of 2025, according to a report released by the Labor Department.

The Labor Department said labor productivity shot up by 2.8 percent in the fourth quarter after soaring by an upwardly revised 5.2 percent in the third quarter.

The bigger than expected increase in productivity, a measure of output per hour, came as output surged by 2.6 percent and hours worked edged down by 0.2 percent.

The report said unit labor costs also jumped by 2.8 percent in the fourth quarter after tumbling by a revised 1.8 percent in the third quarter.

Unit labor costs were expected to shoot up by 2.1 percent compared to the 1.9 percent slump that had been reported for the previous quarter.

The bigger than expected rebound by unit labor costs came as hourly compensation spiked by 5.7 percent in the fourth quarter, more than offsetting the surge in productivity.

Real hourly compensation, which takes changes in consumer prices into account, shot up by 3.1 percent during the quarter.

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