Slower wage growth curbs US labor costs in third quarter
SPY•The US Employment Cost Index rose 0.8% in the third quarter, slowing from 0.9% in the prior quarter and matching economists’ expectations. Wages and salaries increased 0.7%, while benefits rose 0.9%.
1. Labor cost growth slows
The Employment Cost Index, the broadest measure of labor costs, rose 0.8% in the third quarter after increasing 0.9% in the April-June period. Labor costs were up 3.4% over the 12 months through September, unchanged from the year through June.
2. Wages and benefits
Wages and salaries climbed 0.7% in the quarter, down from 0.9% in the prior quarter, and rose 3.1% over the year through September. Benefits increased 0.9% in the quarter and 3.9% over the year. Inflation-adjusted wages fell 0.6% over the 12 months through September.
3. Inflation context
The report described slower wage growth as a sign that the labor market was unlikely to be a source of significant price pressure. The Fed’s preferred inflation measures rose in September: the personal consumption expenditures price index was up 3.6% year over year, while core PCE inflation increased 3.1%.
