US Labor Costs Rise More than Thought

Unit labor costs in the US nonfarm business sector rose by 4.4% in Q4 2025, more than earlier estimates of 2.8% and after a 1% increase in Q3. It reflects a 6.3% increase in hourly compensation and a 1.8% increase in productivity. In the manufacturing sector, unit labor costs rose 9.1%, the most since the third quarter of 2022, reflecting a 6.3% increase in hourly compensation and a 2.5 decrease in productivity. On an annual basis, nonfarm unit labor costs rose 2.4%, while manufacturing unit labor costs advanced 2.9%. For 2025, unit labour costs rose 2.3% in the nonfarm business sector and 2.4% in the manufacturing sector.

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.

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%.