Labor costs in the United States increased at a consistent pace during the second quarter, suggesting that the job market is not significantly fueling inflationary pressures.
The Employment Cost Index, which tracks changes in wages and benefits, rose by 3.4% year-over-year, according to data released Friday by the Bureau of Labor Statistics. However, after adjusting for inflation, the real value of compensation actually declined.
On a quarterly basis, the index climbed 0.9%.
The Federal Reserve has been closely monitoring labor market conditions. While hiring activity picked up early in the second quarter, it gradually slowed by the end of the period. Friday's data indicates that the early-quarter hiring uptick did not materially boost wage growth, suggesting the labor market remains broadly in balance.
Fed Chair Kevin Warsh noted on Wednesday, after holding interest rates steady, that "job growth has been roughly in line with the size of the labor force, and the unemployment rate has changed little."
Separate data released Thursday showed that U.S. inflation cooled in June, though it remains well above the Fed's 2% target.
Friday's Employment Cost Index report also revealed that wages and salaries for private-sector workers rose 0.9% quarter-over-quarter in the three months through June, and 3.2% year-over-year. After adjusting for inflation, however, real wages and salaries declined on an annual basis.
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