Stocks on Wall Street were trading lower. The dollar gained versus a basket of currencies. U.S. Treasury prices fell, with the yield on the 30-year bond at a 19-year high.
The Federal Reserve on Wednesday left its benchmark overnight interest rate in a 3.50%-3.75% range. Three members of the U.S. central bank's policy-setting committee dissented. They "preferred" a quarter-percentage-point hike.
While inflation eased in June, risks are tilted to the upside amid war in the Middle East, now in its sixth month.
The retreat in inflation helped to lift consumer sentiment in July, a separate report showed on Friday. The University of Michigan's Surveys of Consumers' Consumer Sentiment Index increased to a final reading of 55.2 from 54.4 earlier this month. The index was at 49.5 in June.
The improvement was at odds with the Conference Board survey this week, which showed its gauge of consumer confidence falling in July amid a deterioration in perceptions on the labor market.
"Broad-based improvements were seen across all groups by income, education, wealth, age, and political party," said Joanne Hsu, the director of the Surveys of Consumers. "Consumers remain focused on pocketbook issues like purchasing power, while political or military developments remain in the background."
The ECI report showed goods-producing industries wages and salaries jumped 1.2% last quarter after gaining 0.4% in the January-March quarter. They were boosted by a 1.5% rebound in construction wages after being unchanged in the January-March quarter. Manufacturing wages increased 1.0%.
Wages in service-providing industries climbed 0.8%, matching the prior quarter's gain. Wage growth in the wholesale trade industry braked sharply, rising only 0.1% after advancing 1.2% in the first quarter. State and local government wages increased 0.9% after rising 1.0% in the January-March quarter. They increased 3.4% in the 12 months through June.
Benefit costs for all workers rose 1.0% after surging 1.2% in the January-March quarter. They increased 3.8% in the 12 months through June after increasing 3.6% in the year through March. The slowdown over the quarter was mostly in the private sector, where benefits rose 0.9% after shooting up 1.3% in the first three months of the year.
"We see limited signs that the labor market is at risk of retightening and putting upward pressure on wages and inflation," said Veronica Clark, an economist at Citigroup.
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