New data of US labour productivity showed US workers produced more per hour in the third quarter of 2026. The employee costs to produce one unit of output declined for the first time since 2025. The report suggests rising capital spending is resulting in greater efficiency, which is particularly notable as input costs continue to surge higher. Meanwhile, separate reports showed layoffs and jobless claims remain low.

• US productivity rose sharply over the quarter. The US Bureau of Labor Statistics reported that nonfarm business productivity, or output per hour worked, grew at an annualized rate of 3.6% in the third quarter. This was the fastest pace of growth in a year.
• Output grew without more hours. Business output rose by 3.7% while hours worked increased just 0.1%, meaning businesses produced more without adding much labour.
• The cost of labour per unit of output declined by 0.7%, the first drop since the second quarter of 2025. Hourly compensation rose by 2.9%, less than productivity. Over the past year, unit labour costs are up by 2.4%.
• Layoff announcements remain low. Challenger, Gray & Christmas reported that US employers announced 43,994 job cuts in October, down 71% from a year earlier and the lowest October total since 2023.
• Initial jobless claims dropped by 6,000 to 189,000 over the week ended October 31, matching the week ended July 18 as the lowest level since 1969. Continuing jobless claims rose by 23,000 to 1.718 million.

The data show a US labour market where employers are holding on to workers and significant capital investment is paying off in efficiency gains. Productivity gains allow companies to grow output while keeping costs in check, which can support profits and ease inflationary pressures. Today's October jobs report will offer a fuller picture of the US labour market.

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