US Q3 employment costs rise 0.8%, matching forecasts

• The prior quarter recorded a 0.9% gain.
• Employment benefits were up 0.9%, against 1.0% in the preceding quarter.
• Employment wages advanced 0.7%, compared with 0.9% in the earlier quarter.

In the third quarter, the US Employment Cost Index (ECI) gained 0.8% quarter over quarter, helped by gains in both wages and salaries and benefit costs. Wages and salaries moved 0.7% higher, while benefit costs were up 0.9% from the previous quarter.

Measured against a year earlier, total compensation for civilian workers rose 3.4%, with wages and salaries ahead by 3.1% and benefit costs up 3.9%. These numbers indicate that labour cost pressures are still fairly subdued, though benefit outlays keep climbing faster than wages.

In private industry, compensation costs likewise rose 0.8% on the quarter and 3.4% on the year. After adjusting for inflation, however, wages and salaries fell 0.6% over the same 12-month stretch, as nominal pay increases still lag consumer price gains. That persistent gap between nominal and inflation-adjusted earnings underscores how much households are being squeezed by higher living expenses.

The ECI is a quarterly Bureau of Labor Statistics (BLS) report designed to track how the total cost of labour shifts for businesses. The Fed views it as the "gold standard" for gauging wage inflation because it is more detailed and complete; its main drawback is that it is less timely than the Average Hourly Earnings data.