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

Odaily Planet Daily reports that U.S. 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 show that after an upward revision to 5.2% in the third quarter, productivity (i.e., 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 improve employee efficiency. Investments in artificial intelligence (AI) and other technologies have enabled some companies to operate with leaner staff, which is also one of the reasons for the sluggish hiring last year. Against the backdrop of continued AI investment, economists generally expect efficiency to keep improving this year. (Jin10)