Name: U.S. productivity accelerates to strongest pace in two years
Uploaded: 2026-01-08T16:47:31.096Z
Duration: 3 min 7 s
Description: US labor productivity accelerated in the third quarter to its strongest pace in two years. Productivity soared to an annualized rate of 4.9%. Economic growth in the quarter also powered ahead. The US trade gap narrowed in October and jobless claims rose by 8,000 to 208,000 in the week ending January 3.

US labor productivity accelerated in the third quarter to its strongest pace in two years. Productivity soared to an annualized rate of 4.9%. Economic growth in the quarter also powered ahead. The US trade gap narrowed in October and jobless claims rose by 8,000 to 208,000 in the week ending January 3.

Washington

U.S. productivity growth accelerated to 4.9% in the third quarter, marking the strongest pace in two years and up from 3.3% in the previous quarter. Unit labor costs fell by 1.9%, while the labor market showed stability with low unemployment claims and a significant reduction in job cut announcements.

The U.S. trade deficit narrowed to $29.4 billion, the smallest since 2016, driven by increased exports and decreased imports, partly due to tariffs. Analysts note that recent productivity gains are likely due to capital investment and technological advancements, with companies delaying hiring decisions amid uncertainty over future economic policies.

U.S. productivity accelerates to strongest pace in two years

Well, John, it looks like we have our last clue before the payrolls report tomorrow. Two hundred and eight thousand jobs for unemployment claims filings. That's up from one ninety nine was the initial report. That's been revised up to two hundred thousand for the prior week. Now remember these are pretty low numbers but we also had the last two weeks be holiday weeks. So we could see a jump up in the weeks after that. This does come after the challenger job cuts this morning released earlier than as expected by Challenger down eight point three percent basically halving the number of job cut announcements in December and the lowest since July of last year. So it does look like the labor market is just kind of hanging in there at this point. We also get the trade balance negative twenty nine point four billion. That's a shockingly low number. The forecast was for fifty eight point seven. And that should do some good in terms of pushing up the revised third quarter growth numbers when we get them. Exports were up two point six percent imports down three point two percent. There's the reason we are not importing anything. A lot of imports going sideways because of the tariffs no doubt. And finally we get productivity. The first read on productivity for the third quarter four point nine percent just a tick lower than anticipated. And it is up from three point three percent in the second quarter. Unit labor costs fall by almost two percent one point nine percent. They were up one percent in the second quarter. And this is important because if companies can get this kind of productivity they don't necessarily need to hire. Remember we had very strong growth in the most recent quarter and it is a result of not adding a lot of people but adding a lot of some sort of capital for productivity. And if that continues then maybe we see companies still holding off on hiring while they wait to see what the Trump economic policies are going to be. Well Mike let's talk about the policy. Now the following question highly dependent on the president's objective but ultimately is his policy working. Well that depends on what his policy actually is. And I am not really joking about that. I'm trying to be serious in the sense that if the president's goal is to bring down the trade deficit he's done that. It's the smallest since 2016. But that's basically irrelevant to the overall economy and isn't really going to make anybody's lives a little better. The productivity numbers are good. That's probably from a eye. So I don't know that that has a lot to do with him and the jobless numbers. The payroll numbers that we're seeing are more a result of his policies and uncertainty about what's going to happen going forward as companies wait for further information. So it doesn't look like he's making a lot of progress although if productivity were to continue at these levels we would see it be disinflationary and that might get him back on the affordability track.

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