US Labour Productivity Hits Two-Year High To 4.9% In Q3, Inflationary Pressures On Wages Eased

(MENAFN- Live Mint) US labour productivity grew faster in the third quarter, reaching its highest rate in two years in the third quarter of 2025, which supports evidence that increases in efficiency are helping to reduce inflationary pressures on wages, Bloomberg reported.

Productivity, or non-farm employee output per hour, increased at an annualised rate of 4.9% following a revised 4.1% rise in the second quarter, data from the Bureau of Labour Statistics showed on Thursday, 8 January.

US economic growth surged in the third quarter at the fastest rate in two years, despite a slowdown in the labour market. Unit labour costs, which businesses pay employees to produce one unit of output, fell 1.9%, following a decrease in the previous quarter. That marked the first consecutive declines since 2019.

Also Read | US Labor Laws: Biden administration issues norms curbing 'gig' work, contracting Will the rate cut strengthen the labour market?

On Thursday, Federal Reserve Governor Stephen Miran stated that he aims for 150 basis points of interest-rate reductions this year to strengthen the labour market.

Miran called the monetary policy restrictive, noting that underlying inflation is probably at 2.3%. This suggests that Fed officials still have room to lower rates further.

“I'm looking for about a point and a half of cuts. A lot of that is driven by my view of inflation,” Miran said in an interview on Bloomberg Television on Thursday.“Underlying inflation is running within noise of our target, and that's a good indication of where overall inflation is going to be going in the medium term.”

Also Read | Why are American women leaving the labour force?

Fed officials are still divided on how much to cut rates this year after reducing them by three-quarter percentage points over their last three meetings. More officials now prefer to hold rates steady at least until they have more information on inflation and employment.

In forecasts for 2026, the median projection by policymakers called for one-quarter-point reduction, while investors expect at least two.

Since September, Miran has consistently advocated for aggressive rate cuts, especially after he took leave from his role as chair of the White House Council of Economic Advisers to serve a Fed governor term ending this month.

“There's about a million Americans who don't have jobs, who could have jobs without causing unwanted inflation,” Miran said.

MENAFN08012026007365015876ID1110573659