Updated: 24-Mar-26 09:16 ET
| Q4 Productivity-Prel |
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| Updated: 24-Mar-26 09:16 ET |
Highlights
- Q4 productivity was revised down to 1.8% (Briefing.com consensus: 2.5%) from the preliminary estimate of 2.8%.
- Unit labor costs were revised up to 4.4% (Briefing.com consensus: 3.1%) from the preliminary estimate of 2.8%.
Key Factors
- The increase in productivity was the result of output increasing 1.5% and hours worked decreasing 0.2%. From the same quarter a year ago, nonfarm business sector labor productivity increased 2.5%.
- The increase in unit labor costs stemmed from a 6.3% increase in hourly compensation and a 1.8% increase in productivity.
- Manufacturing sector labor productivity decreased 2.5%, as output decreased 2.8% and hours worked decreased 0.3%. Unit labor costs in the total manufacturing sector increased 9.1%, driven by a 6.3% increase in hourly compensation and a 2.5% decrease in productivity.
Big Picture
- The key takeaway from the report is the dichotomy of lower productivity and higher unit labor costs, the latter of which will contribute to the Fed's reticence to cut rates soon (even though this is a dated report).
| Category | Q4 | Q3 | Q2 | Q1 | Q4 |
| Nonfarm Business Sector | |||||
| Productivity Q/Q | 1.8% | 5.2% | 4.2% | -0.9% | 1.4% |
| Unit Labor Costs Q/Q | 4.4% | 1.0%% | -2.9% | 7.3% | 2.9% |
| Productivity Y/Y | 2.5% | 2.4% | 2.1% | 2.0% | 2.3% |
| Unit Labor Costs Y/Y | 2.4% | 2.0% | 2.0% | 3.0% | 2.6% |