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The
Employment Cost Index, the broadest measure of labor costs,
edged up 0.2 percent, the Labor Department said on Friday. That
was the smallest gain since the series started in the second
quarter of 1982 and followed an unrevised 0.7 percent increase
in the first quarter,
Economists polled by Reuters had forecast the employment cost
index rising 0.6 percent.
The deceleration in labor costs in the second quarter likely
does not suggest a material slowing in wage growth, as
commissions inflated worker compensation at the start of the
year. Labor market slack has diminished significantly over the
last few years, which is expected to start putting upward
pressure on wages.
At 5.3 percent, the unemployment rate is close to the 5.0
percent to 5.2 percent range that most Federal Reserve officials
onsider consistent with full employment.
The ECI is widely viewed by policymakers and economists as one
of the better measures of labor market slack. It is also
considered a better predictor of core inflation.
Wages and salaries, which account for 70 percent of employment
costs, rose 0.2 percent in the second quarter. They had
increased 0.7 percent in the first quarter.
Private sector wages and salaries also rose 0.2 percent after
gaining 0.7 percent in the prior quarter.
In the 12 months through June, labor costs rose 2.0 percent, the
smallest 12-month increase since last year, and slipping further
below the 3 percent threshold that economists say is needed to
bring inflation closer to the Fed's 2 percent medium-term
target.
(Reporting by Lucia Mutikani; Editing by Paul Simao)
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