Employment Costs Rise 0.6% For Third Straight Quarter

For the third straight quarter, employer costs rose a quarter-to-quarter 0.6 percent in the third-quarter. Component contributions shifted slightly with wages & salaries down 1 tenth to plus 0.5 percent and benefits up 2 tenths to plus 0.7 percent. Year-on-year, total costs held steady at a moderate plus 2.3 percent with wages & salaries dipping 1 tenth to 2.4 percent and benefits up 3 tenths to 2.3 percent.

This report, which isn't raising any red flags, is closely watched by Federal Reserve policy makers who, given the strength of the labor market, are on the look out for early signs of wage-related inflation.

Recent History Of This Indicator:
The employment cost index rose a constructive 0.6 percent in the second quarter and forecasters see another 0.6 percent gain in the third quarter which would be the fourth gain at this rate in the last five quarters. Wages & salaries have been leading the report, rising 2.5 percent on a year-over-year basis in the last report against a 2.0 percent rise in benefits. The risk that tight conditions in the labor market are raising employer costs is the bedrock argument for policy hawks at the Federal Reserve.