US labour costs revised down in sign of easing inflation pressure
US THIRD-QUARTER labour costs grew less than initially estimated after a downwardly revised decline in the prior three months, adding to evidence the job market is no longer a source of inflationary pressure.
Unit labour costs, or what a business pays employees to produce one unit of output, increased at a 0.8 per cent annualised rate from July through September, following an revised 1.1 per cent decrease in the prior period, data from the Bureau of Labor Statistics showed on Tuesday (Dec 10).
The initial labour costs reading had shown 1.9 per cent gain in the third quarter. The adjustments to both periods reflected downward revisions to hourly compensation.
Productivity, or nonfarm business employee output per hour, rose at an unrevised 2.2 per cent annualised rate in the July-to-September period after rising at a 2.1 per cent pace in the prior quarter.
Hourly worker compensation, unadjusted for inflation, rose at a 3.1 per cent in the third quarter – 2.2 percentage points less than initially estimated. Second-quarter compensation growth was revised down sharply.
The figures indicate productivity-enhancing efforts are helping alleviate the impact of still-elevated operating costs, reducing pressure on companies to raise prices. That’s a comforting development for Federal Reserve policymakers against a backdrop of inflation that has proved stubborn in recent months.
November figures on Wednesday are expected to show a fourth straight 0.3 per cent increase in the consumer price index excluding food and fuel. The data will be the last major inflation data point before the Fed’s final policy meeting of the year on Dec 17-18.
On a year-over-year basis, unit labour costs were up 2.2 per cent, the smallest annual advance since 2023. Productivity increased 2 per cent. BLOOMBERG
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