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US labour costs increase 0.6% in Q3
[WASHINGTON] US labour costs maintained a steady pace of increase in the third quarter, showing little signs of a significant pickup in wage inflation.
The Employment Cost Index, the broadest measure of labor costs, increased 0.6 per cent after a similar gain in the second quarter, the Labour Department said on Friday. That left the year-on-year rate of increase at 2.3 per cent.
Economists polled by Reuters had forecast the ECI rising 0.6 per cent in the third quarter.
While the ECI costs have increased 0.6 per cent every quarter this year, anecdotal evidence suggest wage growth has been picking up. The Federal Reserve's latest Beige Book reported rising pressures in some parts of the country and certain sectors of the economy in September and early October.
Wage growth has been frustratingly slow, but there are hopes that tightening labor market conditions could unleash a faster pace of increases. Economists say labor costs need to rise by at least 3 per cent to push inflation closer to the US central bank's 2 per cent inflation target.
Labour costs increased 2.3 per cent in the year to June.
The ECI is widely viewed by policymakers and economists as one of the better measures of labour market slack. It is also considered a better predictor of core inflation.
Wages and salaries, which account for 70 per cent of employment costs, rose 0.5 per cent in the third quarter. They increased 0.6 per cent in the second quarter. Wages and salaries were up 2.4 per cent in the 12 months through September. That followed a 2.5 per cent gain in the year to June.
Benefits for all workers increased 0.7 per cent in the July-September quarter after rising 0.5 per cent in the second quarter.