The US Bureau of Labor Statistics reports that nonfarm business productivity rose 2.8% in Q4 2025, with unit labor costs up 2.8%. Annual productivity grew 2.2%, while real hourly compensation increased 1.4%.
In manufacturing, Q4 productivity fell 1.9%, but annual productivity rose 2.0%, with unit labor costs up 2.3% and real compensation up 1.6%. Revisions reflect updated BLS employment and hours data. The BLS writes:
Nonfarm business sector labor productivity increased 2.8 percent in the fourth quarter of 2025, the U.S. Bureau of Labor Statistics (BLS) reported today, as output increased 2.6 percent and hours worked decreased 0.2 percent. (All quarterly percent changes in this release are seasonally adjusted annualized rates.) From fourth quarter 2024 to fourth quarter 2025, nonfarm business sector labor productivity increased 2.8 percent. Annual average productivity increased 2.2 percent from 2024 to 2025.
Unit labor costs in the nonfarm business sector increased 2.8 percent in the fourth quarter of 2025, reflecting a 5.7-percent increase in hourly compensation and a 2.8-percent increase in productivity. Unit labor costs increased 1.3 percent over the last four quarters.
BLS calculates unit labor costs as the ratio of hourly compensation to labor productivity. Increases in hourly compensation tend to raise unit labor costs, while increases in productivity tend to reduce them.
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