Q3 Productivity Rises 3.6% as Unit Labor Costs Fall; Claims at 189,000
U.S. productivity grew at a 3.6% rate in the third quarter and unit labor costs fell 0.7%, BLS said Nov. 5. Jobless claims fell to 189,000.
Why it matters
- Nonfarm business productivity rose at a 3.6% annual rate in the third quarter of 2026, as output grew 3.7% and hours worked 0.1%, the Bureau of Labor Statistics said Thursday, Nov. 5. Second-quarter productivity was revised up to 2.1%.
- Unit labor costs fell at a 0.7% rate, because hourly compensation rose 2.9%, less than productivity. Over the past year, unit labor costs rose 2.4% and productivity 2.1%.
- Seasonally adjusted initial jobless claims fell 6,000 to 189,000 in the week ending Oct. 31, the Labor Department said, and the four-week average fell to 194,750. The October jobs report is due Friday, Nov. 6.
Data Brief: a summary of published data, with our notes on what it shows.
U.S. worker productivity grew at a 3.6% annual rate in the third quarter of 2026, and unit labor costs fell at a 0.7% rate, the Bureau of Labor Statistics said Thursday, Nov. 5. The same morning, the Labor Department said initial jobless claims fell 6,000 to 189,000 in the week ending Oct. 31.
Both reports came out at 8:30 a.m. ET, a day before the October jobs report.
What did the third-quarter productivity report show?
Nonfarm business output rose 3.7% and hours worked rose 0.1%, BLS said, so output per hour rose 3.6%. Unit labor costs, the ratio of hourly compensation to productivity, fell because pay grew more slowly than output per hour.
| Nonfarm business sector | Q3 2026 (annual rate) | Change from Q3 2025 |
|---|---|---|
| Labor productivity | +3.6% | +2.1% |
| Output | +3.7% | +2.3% |
| Hours worked | +0.1% | +0.2% |
| Hourly compensation | +2.9% | +4.5% |
| Real hourly compensation | +1.1% | +1.0% |
| Unit labor costs | -0.7% | +2.4% |
Source: BLS Productivity and Costs, third quarter 2026, preliminary, Table 2, Nov. 5. Quarterly figures are seasonally adjusted annual rates.
BLS revised second-quarter productivity up 0.7 percentage point to 2.1%. In manufacturing, productivity rose 0.3% in the third quarter, as output grew 1.3% and hours 1.0%. For the quarter's output, see our third-quarter GDP brief.
What did the weekly jobless claims report show?
Claims stayed low. The four-week average fell 2,250 to 194,750, the Labor Department said. The previous week was revised up 1,000 to 195,000.
| Weekly claims (seasonally adjusted) | Latest | Prior week | Year earlier |
|---|---|---|---|
| Initial claims (week ending Oct. 31) | 189,000 | 195,000 | 228,000 |
| Four-week average | 194,750 | 197,000 | 225,500 |
| Continuing claims (week ending Oct. 24) | 1,718,000 | 1,695,000 | 1,962,000 |
| Insured unemployment rate | 1.1% | 1.1% | 1.3% |
Source: U.S. Department of Labor, Unemployment Insurance Weekly Claims, Nov. 5.
Continuing claims, people still receiving benefits after their first week, rose 23,000. Unadjusted initial claims fell 1.6% to 176,698, while seasonal factors had expected a rise of 1.4%, the department said.
What does this mean for the Fed and Friday's jobs report?
When productivity grows faster than hourly pay, as BLS's figures show it did in the third quarter, labor costs per unit of output fall. Low initial claims mean relatively few newly laid-off workers filed for benefits. On Wednesday, ADP reported 86,000 private jobs added in October; see our ADP and ISM services brief.
The Fed held its target range at 3.75% to 4% on Oct. 28 in a 10–2 vote, with two officials preferring a hike, its statement said. Its last 2026 meeting is Dec. 8–9; see the FOMC meeting schedule for 2026 and 2027. BLS will publish revised third-quarter productivity on Tuesday, Dec. 8, the first day of that meeting, and the October Employment Situation on Friday, Nov. 6, at 8:30 a.m. ET.
Sources
- U.S. Bureau of Labor Statistics, Productivity and Costs, Third Quarter 2026, Preliminary (Nov. 5, 2026), and Table 2
- U.S. Department of Labor, Unemployment Insurance Weekly Claims (Nov. 5, 2026)
- U.S. Bureau of Labor Statistics, Schedule of releases for The Employment Situation (accessed Nov. 5, 2026)
- Federal Reserve, FOMC statement, Oct. 28, 2026
- Federal Reserve, FOMC meeting calendars (accessed Nov. 5, 2026)
- ADP Research, ADP National Employment Report, October 2026 (Nov. 4, 2026)
