PRODUCTIVITY POWERHOUSE

Annualized 26Q3 non-farm business labor productivity growth came in at an astounding 3.6%, pushing annualized 26Q3 unit labor costs into negative territory: -0.7%. Moreover, 26Q2 annualized labor productivity growth was just upwardly revised from 1.4% to 2.1%. This means there is little new inflationary pressure coming out of the labor market. Tariffs and rising oil prices are inflationary, but absent commensurate wage increases, overall inflation will soften.