US Fourth Quarter Productivity Growth Revised to 1.8%

Worker productivity in the United States grew at a slower pace than previously estimated during the fourth quarter, according to revised government data released on Tuesday. The Labor Department's Bureau of Labor Statistics reported that nonfarm productivity, which measures hourly output per worker, rose at a downwardly revised 1.8% annualized rate last quarter. This figure fell short of the 2.8% pace initially reported and was lower than the 2.0% rate anticipated by economists polled by Reuters.

The downward adjustment in productivity growth contributed to a sharper rise in unit labor costs, which represent the price of labor per single unit of output. These costs increased at a 4.4% rate in the fourth quarter, a substantial revision from the initially estimated 2.8% pace. Economists had expected an upward revision to 3.5%. On a year-over-year basis, unit labor costs grew by 2.4%.

The revision to productivity figures follows a significant downgrade to fourth-quarter gross domestic product growth, which was recently adjusted to a 0.7% rate from an initial 1.4% estimate. Despite the quarterly slowdown, productivity grew at a 2.5% rate compared to the same period a year earlier. For the full year of 2025, productivity increased by 2.1%, while unit labor costs rose by 2.3%.

Market experts suggest that the ongoing adoption of artificial intelligence technologies could eventually enhance productivity levels and help stabilize rising labor expenses. The current report, which was delayed due to a government shutdown last year, also noted that third-quarter productivity growth remained unrevised at a robust 5.2% rate, while unit labor costs for that period were revised down to 1.0% from 1.8%.