US productivity rose again in late 2025 as companies invest in AI

In short: U.S. productivity grew strongly in late 2025, and several surveys suggest AI tools are starting to save workers time, although the benefits are uneven.

What's going on

New U.S. data shows labor productivity, which is a measure of how much the economy produces per hour of work, rose at a 2.8% annual rate in Q4 2025. That was higher than forecasts and followed an even stronger, revised 5.2% gain in Q3. For all of 2025, productivity was up 2.2%.

One reason cited is that businesses have been spending more on AI and other technology to work more efficiently. Think of productivity like getting more done in the same 8 hour day. When productivity rises, companies can sometimes raise pay without raising prices as much. In Q4, unit labor costs, which roughly means labor cost per item or service produced, rose 2.8%.

Surveys and studies add detail on how AI may be helping. One estimate says “generative AI” (chatbots that can write and summarize text) already saves time equal to 1.6% of total work hours, with the biggest impact in fields like finance and professional services. A Morgan Stanley survey found companies reported an average net productivity increase of 11.5% over the past year in AI-affected sectors, and some also reported staff reductions.

What to watch

Researchers and executives expect AI to add to productivity growth for years, but not always in a dramatic way. Some leaders say they have not seen big gains yet, sometimes called an “AI productivity paradox,” meaning the promise is clear but the results are slower to show up. Watch for whether more companies can turn pilots into everyday use in 2026, and how that affects hiring and wages.

Source: Financial Times