US: Clearer Signs of Strengthening Productivity Trend

Strong Growth in Nonfarm Labor Productivity in Q3

Driven by a GDP report that surpassed expectations, nonfarm labor productivity surged at an impressive annualized rate of 4.9% during the third quarter. This significant increase was fueled by output growth that far outpaced the rise in total hours worked.

This robust performance highlights that the current productivity trend is outstripping that of the previous economic cycle—averaging 2.0% since late 2019, compared to 1.5% between 2007 and 2019. Such momentum in productivity may help ease worries about inflationary pressures.

Specifically, output per hour in the nonfarm business sector climbed at a 4.9% annualized pace in the third quarter, reflecting the sector’s strong expansion.