Analysis: U.S. Q4 productivity exceeded expectations last year, with cost control helping to cool inflation

Odaily Planet Daily News: The United States’ labor productivity growth in the fourth quarter of 2025 exceeded expectations, further demonstrating that companies are working to improve efficiency to control costs. Data released by the Bureau of Labor Statistics on Thursday showed that after an upward revision to 5.2% growth in the third quarter, productivity (measured as output per hour in the non-farm sector) grew at an annualized rate of 2.8% in the fourth quarter. Economists’ median forecast prior to this was a 1.9% increase. The recent upward trend in productivity helps ensure wage pressures are kept in check and confirms Federal Reserve officials’ view that the labor market is no longer a source of inflation. Since labor costs are a major expense for many companies, they are turning to new technologies and equipment to boost employee efficiency. Investments in technologies like artificial intelligence (AI) have enabled some companies to operate with leaner staff, which is also one of the reasons for weak hiring last year. Amid ongoing AI investments, economists generally expect efficiency to continue improving this year. (Jin10)