WASHINGTON, Jan 29 (Reuters) – U.S. worker productivity grew at its fastest pace in two years in the third quarter, the government confirmed on Thursday, likely fueled by an artificial intelligence spending boom.
Nonfarm productivity, which measures hourly output per worker, increased at an unrevised 4.9% annualized rate, the Labor Department’s Bureau of Labor Statistics said on Thursday.
That was the fastest rate since the third quarter of 2023.
Economists polled by Reuters had expected third-quarter productivity growth would be unrevised. Productivity growth in the April-June quarter was also unrevised at a 4.1% pace.
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.
Democrats in the U.S. Senate have said they would vote against funding legislation that includes money for the Homeland Security Department that oversees ICE, the federal immigration agency. Congress faces a January 30 deadline to fund the government or risk a partial government shutdown.
Productivity grew at an unrevised 1.9% rate from a year ago.
Strong productivity helps to explain what economists are calling a jobless economic expansion. Though the economy grew at a robust 4.4% rate in the third quarter, only 584,000 jobs were added in 2025, well below the 2.0 million created in 2024.
Economists say the Trump administration’s aggressive trade and immigration policies have reduced both demand for and supply of workers. Businesses are also unsure of their staffing needs as they invest heavily in AI, limiting hiring.
Unit labor costs – the price of labor per single unit of output – decreased at an unrevised 1.9% rate in the third quarter. They fell at a 2.9% rate in the second quarter.
Labor costs increased at a 1.3% rate from a year ago, revised up from the previously reported 1.2% growth pace.
(Reporting by Lucia MutikaniEditing by Ros Russell)
