US worker productivity surges in third quarter
SPY•US nonfarm productivity rose at a 3.6% annualized rate in the third quarter, while unit labor costs fell at a 0.7% rate. Economists had expected productivity growth of 2.8% and labor costs to rise 0.6%.
1. Productivity accelerates
Nonfarm productivity, measuring hourly output per worker, increased at a 3.6% annualized rate in the third quarter, following an upwardly revised 2.1% pace in the second quarter. Productivity grew 2.1% from a year earlier.
2. Labor costs decline
Unit labor costs fell at a 0.7% annualized rate, the first decline since the second quarter of 2025, after an upwardly revised 1.9% increase in the prior quarter. Labor costs were up 2.4% from a year earlier.
3. Fed outlook
The figures followed data showing a moderate third-quarter increase in the Employment Cost Index. The Federal Reserve kept its benchmark interest rate in the 3.75%-4.00% range last week and said inflation remained elevated; economists expect the Fed to raise borrowing costs in December.
