Washington, July 30--Employers saw the growth rate in the cost of hiring and retaining workers slow in the second quarter, which could help contain inflation worries as oil-price pressures mount.
The U.S. Labor Department's employment-cost index rose 0.9% from April through June, compared with a 1.1% increase the previous quarter. The slowdown mainly reflected some moderation in the soaring growth of benefit costs, to 1.8% after a 2.4% gain in the first quarter. But in year-to-year terms, benefit costs were up 7.2%, the fastest growth rate in 14 years.
Wages and salaries grew 0.6%, the same pace as in the first quarter. In the year through June, overall compensation costs were up 3.9%, compared with a 3.8% rate in the year through March.
The numbers matched Wall Street's expectations and suggested that the rebounding labor market -- which has added about 1.5 million nonfarm jobs since last summer -- isn't putting much upward pressure on wages.
While that isn't great news for workers, it could come as welcome news on the overall inflation front. Other areas of the economy, most notably the energy sector, face mounting pricing pressures.
Oil-price increases have played an important role in pushing the inflation rate up faster than Federal Reserve policy makers expected. But policy makers have said they don't expect the nation's general price level to run out of control, in large part because labor costs are contained.
"As employment expands substantially, labor markets will gradually tighten, and wage pressures may become a more important story at some point in the not-too-distant future," said Greenwich Capital Markets economist Steve Stanley. "But for now, wages are not going to drive inflation higher."
Meanwhile, the number of U.S. workers filing first-time applications for unemployment benefits inched higher by 4,000 to 345,000 in the week ended July 24, the Labor Department said. The four-week average, which flattens out weekly fluctuations, fell by 1,000 to 336,250.
