WASHINGTON U.S. labor costs increased at their slowest pace in more than two years in the first quarter, suggesting that slack in the jobs market continues to keep wage inflation subdued.
The Employment Cost Index, the broadest measure of labor costs, rose 0.3 percent after gaining 0.5 percent in the fourth quarter, the Labor Department said on Wednesday. That was the smallest gain since the third quarter of 2011.
Economists polled by Reuters had forecast labor costs increasing 0.5 percent in the first quarter.
In the 12 months through March, costs rose 1.8 percent, the smallest since the second quarter of 2012. They had advanced 2.0 percent in the 12 months through December.
Though the index continues to show little sign of wage inflation it could garner more attention in the quarters ahead as pockets of upward wage pressure start to emerge in areas where employers cannot find qualified workers to fill positions.
The lack of wage inflation is keeping overall price pressures in the economy benign, giving the Federal Reserve latitude to keep benchmark interest rates near zero for a while.
Wages and salaries, which account for 70 percent of employment costs, also increased 0.3 percent in the first quarter. That followed a 0.5 percent rise in the fourth quarter.
Wages and salaries were up 1.6 percent in the 12 months through March. Benefit costs rose 0.4 percent in the January-March period after rising 0.6 percent in the prior quarter.
In the 12 months through March, benefit costs increased 2.1 percent.