Bureau of Labor Statistics · · Revised 229 series
US Q3 2026 productivity rises 3.6% as unit labor costs fall 0.7%
US nonfarm business productivity, or output per hour worked, rose 3.6% at an annualized rate in the third quarter of 2026. Unit labor costs fell 0.7%, so labor costs did not add to inflation.
A data update from FactIQ, written from Bureau of Labor Statistics figures. What is FactIQ?
Key figures
- US nonfarm business productivity, third quarter 2026, annualized
- 3.6%up from a revised 2.1% in the second quarter2014-10-012026-07-01The percentage change from the previous quarter in labor productivity for all workers in the nonfarm business sector
- US nonfarm business unit labor costs, third quarter 2026, annualized
- -0.7%first drop since the second quarter of 20252014-10-012026-07-01The percentage change from the previous quarter in unit labor costs for all workers in the nonfarm business sector
- Labor share of US nonfarm business income, third quarter 2026
- 53.0%down from 53.3% in the second quarter; lowest in data back to 19762014-10-012026-07-01Labor share for the Nonfarm business sector, Level (Percentage)
- Nonfinancial corporate profits, second quarter 2026
- $3,176.8bnup 46.5% annualized on the quarter and 21.1% on the year2014-07-012026-04-01Profits for the Nonfinancial corporate sector, Level (Billions of current dollars)
Output grew on almost unchanged hours, which lifted productivity
Labor productivity measures output per hour worked. Faster productivity lets the economy grow without pushing up prices. These are first estimates for the third quarter of 2026, shown as annualized rates. In the nonfarm business sector, which covers businesses other than farms, productivity rose 3.6%. That was up from a revised 2.1% in the second quarter.
- Output grew 3.7%, while total hours worked rose 0.1%.
- Productivity was up 2.1% from a year earlier.
- In the wider business sector, which includes farms, productivity rose 4.1%.
Unit labor costs fell for the first time since the second quarter of 2025
Unit labor costs measure what businesses pay in labor to produce one unit of output. Growth in hourly compensation slowed to 2.9% from 4.0%. Productivity grew faster than pay, so unit labor costs fell 0.7%. They were up 2.4% from a year earlier. The output price deflator, which tracks prices of nonfarm business output, slowed to 2.0% from 7.0% in the second quarter.
Workers' share of income fell to its lowest level in data going back to 1976
Labor's share of nonfarm business income was 53.0%. It was 53.3% in the second quarter and 54.7% in the first quarter of 2025. For nonfinancial corporations, the labor share was 54.6%. Their profits are reported a quarter later and were revised to $3,176.8bn for the second quarter. That was up 46.5% annualized on the quarter, compared with 48.7% before the revision, and up 21.1% on the year.
Revisions show labor costs rose faster earlier than first reported
- Unit labor cost growth: fourth quarter of 2025 revised to 4.7% from 2.1%, and first quarter of 2026 to 3.7% from 1.3%. The second-quarter rate from a year earlier rose to 2.6% from 1.4%.
- Hourly compensation from a year earlier: second quarter revised to 4.9% from 3.7%. The third-quarter rate is 4.5%, or 1.0% after adjusting for consumer price inflation.
- Productivity: second quarter revised to 2.1% from 1.4%, and first quarter to 1.4% from 0.8%.
- Manufacturing in the third quarter: productivity rose 0.3%, output 1.3% and unit labor costs 2.7%.
Source: Bureau of Labor Statistics. See all BLS data in FactIQ.