FX.co ★ US Labor Costs Rise the Most in a Year

In the first quarter of 2025, unit labor costs in the U.S. nonfarm business sector increased by 5.7%, exceeding market forecasts of a 5.1% rise. This figure also marks a sharp acceleration from the previously revised 2.0% increase in the prior quarter, based on an initial estimate. It is the most significant quarterly surge in labor costs since the 8.3% hike recorded in Q1 2024. This rise is attributed to a 4.8% boost in hourly compensation combined with a 0.8% decrease in productivity. In the manufacturing sector specifically, unit labor costs rose by 1.6%, driven by a 6.2% escalation in hourly compensation alongside a 4.5% growth in productivity. On an annual scale, unit labor costs grew by 1.3% in the first quarter, with manufacturing unit labor costs experiencing a 0.7% increase.