[WASHINGTON] US labour costs rose more than expected in the third quarter as wages recorded their largest gain since 2008, a sign that a long-awaited pick-up in wage growth was underway.
The Employment Cost Index, the broadest measure of labour costs, increased 0.7 per cent after advancing by the same margin in the second quarter, the Labour Department said on Friday.
Economists polled by Reuters had forecast the employment cost index increasing 0.5 per cent in the July-September period.
Wages and salaries, which account for 70 per cent of employment costs, rose 0.8 per cent in the third quarter, the largest increase since the second quarter of 2008. They had gained 0.6 per cent in the second quarter.
Federal Reserve officials view the ECI as one of the better measures of labour market slack.
Policymakers at the US central bank on Wednesday gave a fairly upbeat assessment of the labour market, dropping their characterization of labour market slack as "significant" and replacing it with "gradually diminishing." In the 12 months through September, labour costs increased 2.2 per cent, the largest increase since the second quarter of 2011. They had increased 2.0 per cent in the 12 months through June.
Wages and salaries were up 2.1 per cent in the 12 months through September, the biggest rise since the first quarter of 2009, after increasing 1.8 per cent in the 12 months through June.
Various surveys have been hinting at an acceleration in wage growth.
Benefit costs increased 0.6 per cent in the July-September period. That followed a 1.0 per cent gain in the second quarter. They increased 2.4 per cent in the 12 months through September after rising 2.5 per cent in the 12 months through June.