US labor productivity increased at an annualized rate of 3.6% in the third quarter of 2026, exceeding economists’ expectations of 2.8%, according to data released Thursday by the Bureau of Labor Statistics (BLS).
The increase marked an acceleration from the upwardly revised 2.1% growth recorded in the second quarter, reflecting stronger output relative to hours worked.
Nonfarm business output rose 3.7% at an annualized rate, while hours worked increased just 0.1%, indicating that businesses produced more goods and services with relatively little additional labor input.
Compared with the third quarter of 2025, productivity increased 2.1%.
Manufacturing Productivity Shows Mixed Results
Manufacturing productivity increased 0.3% in the third quarter, reflecting differences between durable and nondurable goods industries.
Productivity in durable goods manufacturing rose 2.2%, supported by a 3.8% increase in output and a 1.6% rise in hours worked.
Meanwhile, nondurable goods productivity declined 1.7%, as output fell 1.6% and hours worked increased 0.1%.
Overall manufacturing output increased 1.3%, while hours worked rose 1.0%.
Unit Labor Costs Decline
Unit labor costs in the nonfarm business sector decreased at an annualized rate of 0.7%, following a revised 1.9% increase in the previous quarter.
The decline reflected productivity growth exceeding the 2.9% increase in hourly compensation.
On an annual basis, however, unit labor costs remained 2.4% higher than a year earlier.
The latest figures indicate that businesses increased output more rapidly than labor hours during the third quarter, reducing labor costs per unit of production. The preliminary estimates remain subject to revision as additional economic data becomes available.
