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Labor costs rise in fourth quarter

Posted by: Admin | Posted on: January 31st, 2014 | 0 Comments

WASHINGTON (Reuters) – Labor costs rose in the fourth quarter, with the biggest jump in wages and salaries since 2009, but there was still little sign of wage inflation amid slack in the jobs market.

The Employment Cost Index, the broadest measure of labor costs, increased 0.5 percent after rising 0.4 percent in the third quarter, the Labor Department said on Friday.

Economists polled by Reuters had expected labor costs to increase 0.4 percent. In the 12 months through December, compensation costs rose 2.0 percent.

During periods of strong economic growth, the U.S. central bank closely monitors the index for signs of wage inflation. The absence of wage inflation is keeping overall price pressures in the economy subdued.

This means the Fed could keep interest rates near zero for a while even as it is reducing its monthly bond purchases. Wage growth is, however, expected to gain traction later this year as the economy attains a sustained pace of stronger growth.

Wages and salaries, which account for 70 percent of employment costs, increased 0.6 percent in the fourth quarter. That was the biggest increase since the third quarter of 2009. It followed a 0.3 percent advance in the third quarter.

They were up 1.9 percent in the 12 months through December and up from 1.6 percent in the same period in 2012.

Benefit costs increased 0.6 percent in the fourth quarter after rising 0.7 percent in the July-September quarter.

They rose 2.2 percent in the 12 months through December after advancing by the same margin in the same period in 2012.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

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