Productivity growth
Updated
What it is
Productivity growth measures the increase in output per hour worked, a key driver of non-inflationary wage and GDP growth. When productivity rises faster than compensation, unit labor costs stay contained, easing inflation pressure even as workers earn more. The US Bureau of Labor Statistics publishes quarterly nonfarm business productivity figures as the primary official gauge.
Why it matters lately
US nonfarm business labor productivity rose 1.4% (annualized) in Q2 2026, and was up 2.2% from a year earlier, as output grew 1.7% against a 0.3% rise in hours worked. Manufacturing productivity was revised up to 2.4% for Q2 2026, its strongest reading since Q2 2021, with durable-goods manufacturing productivity up 3.6%. Unit labor costs rose a more modest 1.2% in the quarter as 2.6% compensation growth was partly offset by productivity gains.
Asymmetric Analytics view
Inference (AA): Steady productivity gains give the Fed some cover to treat 2026's oil-driven inflation as transitory rather than demanding a faster hiking path.