Productivity Beat and Falling Labor Costs Keep Fed Cut Odds Alive
As seen on the 24/7 Wall St. homepage on November 5, 2026.
Falling unit labor costs alongside a firm jobless claims number takes wage-driven inflation off the table without signaling a weakening economy, the rare mix that keeps Fed cut odds alive.
Nonfarm Productivity rose 3.6% versus 2.7% expected, and Unit Labor Costs fell 0.7% against forecasts for a 0.4% increase. Initial Jobless Claims came in below estimates at 189k versus 196k. https://t.co/29Wb5U1k8b
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Nonfarm Productivity rose 3.6%, beating expectations and signaling workers are producing more output per hour without employers needing to raise wages to get it.
Unit Labor Costs fell 0.7%, missing expectations for an increase. That removes one of the stickiest arguments for keeping rates elevated, since wage-driven inflation is the Fed's most stubborn adversary.
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Initial Jobless Claims came in better than expectations, meaning the labor market remains firm even as cost pressures ease.
Together, the three readings tilt the Fed's calculus toward easing without the usual trade-off of a cooling economy.