The wages of American workers grew healthily in the third quarter, a sign low unemployment is stirring inflation pressures.
The employment-cost index, a measure of wages and benefits for civilian workers, rose a seasonally adjusted 0.7% in July through September, the Labor Department said Tuesday. Economists surveyed by The Wall Street Journal expected a 0.7% gain.
Continue Reading Below
Wages and salaries, which reflect more than two-thirds of the index, rose 0.7%. Benefits increased 0.8%.
The rise in overall costs marked one of the best quarterly gains in recent years and suggests the tight labor market is exerting pressure on employers to raise salaries to recruit and retain workers. The development could reassure the Federal Reserve as it considers raising interest rates by year's end. The Fed has been looking for higher inflation pressures as a sign the economy is growing steadily and the country is at full employment.
It's too early to tell whether the quarter's strong wage growth will be sustained. Employment costs grew 0.8% in the first quarter of this year only to retreat to 0.5% growth in the second quarter.
Over a broader period compensation costs continue to grow modestly. The employment cost index increased 2.5% over the past year, as did the wage and salary component. Those increases are just a touch above the trend of recent years.
The Labor Department's report on the employment cost index can be found at: http://www.bls.gov/news.release/eci.toc.htm.
Write to Josh Mitchell at firstname.lastname@example.org and Sharon Nunn at email@example.com.
(END) Dow Jones Newswires
October 31, 2017 08:45 ET (12:45 GMT)