Unit Labor Costs Fell 0.7% in Q3: What It Means for Your Bill

Unit labor costs fell 0.7% in the third quarter even as hourly pay rose 2.9%, because productivity jumped 3.6%. For a household that is the cleanest single reason the labor-cost pressure behind your services bill is finally easing, and it should change how you read the next inflation print.

Key Takeaways Unit labor costs in the nonfarm business sector fell 0.7% in the third quarter of 2026, the Labor Department said Thursday. Pay still rose: hourly compensation climbed 2.9%, and productivity rose faster at 3.6%, which is what pushed unit labor costs lower. Real hourly compensation rose 1.1% in the quarter and 1.0% over the past four quarters, so the average working hour now buys about 1% more…