WASHINGTON – U.S. employment costs rose 0.8 percent in the fourth quarter, just below market forecasts, as wage growth picked up and the increase in benefit costs slowed, but inflation once again outpaced the increase in worker paychecks, a government report showed on Tuesday.
The increase in the Employment Cost Index, a broad gauge of what employers pay in wages and benefits, matched the third quarter's 0.8 percent gain and was slightly below Wall Street forecasts for a 0.9 percent advance.
Wages and salaries grew 0.8 percent in the October-to-December period, after a 0.6 percent gain in each of the three previous quarters, while benefit costs rose 1.1 percent after a 1.3 percent advance in the third quarter.
The milder-than-expected increase in costs may temper inflation concerns in financial markets. Still, the Federal Reserve is expected to raise official interest rates later on Tuesday to keep the economy and price pressures on an even keel.
The Labor Department said total employment costs have risen just 3.1 percent over the past 12 months, with wages and salaries up 2.6 percent and benefit costs 4.5 percent higher.
When inflation is taken into account, compensation costs actually shrank 0.3 percent in the last year, the first calendar-year decrease since 1996. But it was the second straight quarter in which inflation-adjusted costs have fallen, after a 1.5 percent drop in the third quarter.
In the 12 months to December, inflation-adjusted wages were down 0.8 percent, the fifth straight quarterly drop. That means worker paychecks bought less than a year earlier, mostly due to soaring energy costs. Benefit costs increased 1.1 percent.