US Third-Quarter Productivity Growth Unrevised

Government confirms fastest productivity pace in two years, likely fueled by AI spending boom

Jan. 29, 2026 at 2:55pm

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The U.S. government confirmed on Thursday that worker productivity grew at its fastest pace in two years during the third quarter, likely driven by an artificial intelligence spending boom. Nonfarm productivity increased at an unrevised 4.9% annualized rate, the fastest since the third quarter of 2023.

Why it matters

Strong productivity growth helps explain the 'jobless economic expansion' where the economy grew robustly in the third quarter but job creation lagged. Businesses are investing heavily in AI, limiting hiring as they remain uncertain about their staffing needs.

The details

The Labor Department's Bureau of Labor Statistics reported that nonfarm productivity, which measures hourly output per worker, increased at an unrevised 4.9% annualized rate in the third quarter. This was the fastest rate since the third quarter of 2023. Productivity growth in the April-June quarter was also unrevised at a 4.1% pace. Unit labor costs - the price of labor per single unit of output - decreased at an unrevised 1.9% rate in the third quarter, after falling 2.9% in the second quarter.

  • The report was delayed by the 43-day federal government shutdown.
  • Another shutdown, which would affect BLS data releases, is looming following a second fatal shooting by federal agents in Minneapolis over the weekend.
  • Congress faces a January 30 deadline to fund the government or risk a partial government shutdown.

The players

U.S. Labor Department

The federal agency that collects data and publishes reports on the U.S. labor market, including productivity and labor costs.

U.S. Congress

The legislative branch of the federal government that faces a January 30 deadline to fund the government and avoid a partial shutdown.

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What’s next

Congress faces a January 30 deadline to fund the government or risk a partial government shutdown, which could further delay the release of economic data from the Bureau of Labor Statistics.

The takeaway

The strong productivity growth in the third quarter, likely driven by increased AI investment, helps explain the 'jobless economic expansion' where robust GDP growth has not translated into commensurate job creation. This trend raises questions about the long-term impact of AI on the labor market and the need for policies to support workers and businesses through this technological transition.