Unit labor costs in the US nonfarm business sector increased by 2.8% in Q4 2025, exceeding market expectations of a 2% rise and following a 1.8% decline in Q3, according to preliminary estimates. The quarterly gain reflected a 5.7% increase in hourly compensation and a 2.8% rise in productivity.
In the manufacturing sector, unit labor costs jumped 8.3%, the largest increase since Q3 2022. This reflected a 6.2% increase in hourly compensation alongside a 1.9% decline in productivity.
On an annual basis, nonfarm unit labor costs rose 1.3%, while manufacturing unit labor costs advanced 2.6%. For the full year 2025, unit labor costs were up 1.9% in the nonfarm business sector and 2.3% in the manufacturing sector.
