The U.S. Bureau of Labor Statistics reported on Nov. 5, 2026, that nonfarm business productivity rose at a 3.6% annualized rate in the third quarter, while unit labor costs fell at a 0.7% pace, as output grew faster than hours worked.
The preliminary estimates are seasonally adjusted. The quarterly rates are annualized, not year-over-year changes. Reuters reported that the unit-cost decline was the first since the second quarter of 2025.
Output outpaced hours
Output increased at a 3.7% annualized rate, compared with a 0.1% rise in hours worked. Productivity measures output per hour, not output per employee.
Compared with the third quarter of 2025, productivity was up 2.1% and unit labor costs were 2.4% higher. That annual comparison differs from the quarterly decline.
Compensation rose despite lower unit costs
Hourly compensation, which includes wages, salaries and employer benefit contributions, rose at a 2.9% annualized rate. Unit labor costs fell because productivity grew faster than compensation.
BLS revised second-quarter productivity growth to 2.1% from 1.4% and unit labor cost growth to 1.9% from 1.2%. The release incorporates annual historical revisions as well as updated quarterly data.
Revised third-quarter estimates are scheduled for Dec. 8, 2026, at 8:30 a.m. Eastern.
The figures provide a broad benchmark for business cost and output trends, not a measure of any individual company’s efficiency. They do not isolate AI’s contribution or determine future hiring, pricing or interest-rate decisions.