US Labor Costs Rise More than Expected

2026-03-05 13:36 By Agna Gabriel 1 min. read

Unit labor costs in the US nonfarm business sector rose by 2.8% in Q4 2025, more than market expectations of 2% and after a 1.8% fall in Q3, preliminary estimates showed.

It reflects a 5.7% increase in hourly compensation and a 2.8% increase in productivity.

In the manufacturing sector, unit labor costs rose 8.3%, the most since the third quarter of 2022, reflecting a 6.2% increase in hourly compensation and a 1.9 decrease in productivity.

On an annual basis, nonfarm unit labor costs rose 1.3%, while manufacturing unit labor costs advanced 2.6%.

For 2025, unit labour costs rose 1.9% in the nonfarm business sector and 2.3% in the manufacturing sector.



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US Labor Costs Rise More than Expected
Unit labor costs in the US nonfarm business sector rose by 2.8% in Q4 2025, more than market expectations of 2% and after a 1.8% fall in Q3, preliminary estimates showed. It reflects a 5.7% increase in hourly compensation and a 2.8% increase in productivity. In the manufacturing sector, unit labor costs rose 8.3%, the most since the third quarter of 2022, reflecting a 6.2% increase in hourly compensation and a 1.9 decrease in productivity. On an annual basis, nonfarm unit labor costs rose 1.3%, while manufacturing unit labor costs advanced 2.6%. For 2025, unit labour costs rose 1.9% in the nonfarm business sector and 2.3% in the manufacturing sector.
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US Labor Costs Fall in Q3
Unit labor costs in the US nonfarm business sector declined by 1.9% in Q3 2025, in line with preliminary estimates, and extending the downward trend after a 2.9% drop in the previous quarter. The decline came as productivity rose 4.9%, outpacing a 2.9% increase in hourly compensation. In the manufacturing sector, unit labor costs rose 1.1%, reflecting a 3.7% rise in hourly compensation and a 3% improvement in productivity. On an annual basis, nonfarm unit labor costs rose 1.3%, while manufacturing unit labor costs were up 1.2%.
2026-01-29
US Labor Costs Fall Unexpectedly in Q3
Unit labor costs in the US nonfarm business sector declined by 1.9% in Q3 2025, significantly below expectations of a 1.0% rise and extending the downward trend after a revised 2.9% drop in the previous quarter, preliminary estimates showed. The decline came as productivity rose 4.9%, outpacing a 2.9% increase in hourly compensation. In the manufacturing sector, unit labor costs rose 1.5%, reflecting a 4.8% rise in hourly compensation and a 3.3% improvement in productivity. On an annual basis, nonfarm unit labor costs rose 1.2%, while manufacturing unit labor costs were up 1.3%.
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