WASHINGTON (Reuters) - U.S. employment costs rose a smaller-than-expected 0.6 percent in the first quarter, the smallest increase in seven years, as the growth in benefit costs slowed and the increase in wages and salaries remained modest, a government report showed on Friday.þþThe increase in the Employment Cost Index, a broad gauge of what employers pay in wages and benefits, was below the fourth-quarter's 0.8 percent rise and well short of the 0.9 percent gain forecast by Wall Street. It was the smallest quarterly rise since a 0.4 percent increase in costs in March 1999, the Labor Department said.þþThe milder-than-expected increase in costs may temper inflation concerns in financial markets. The Federal Reserve is still expected to raise interest rates next month, however, to head off the pressure of rising prices.þþThe Labor Department said wages and salaries rose 0.7 percent in the first quarter, matching the fourth-quarter's gain. Benefit costs edged just 0.5 percent higher, well below the fourth-quarter's 0.9 percent rise and the smallest increase since March 1999.þþIn the 12 months to March, employment costs were up 2.8 percent, with wages up 2.7 percent and benefit costs 3.4 percent higher.þþInflation, however, continues to outpace the growth in employer costs. When inflation is taken into account, compensation costs actually shrank 0.5 percent in the last year, while wages and salaries were 0.7 percent lower.þþTotal compensation for manufacturing workers fell 0.2 percent in the first quarter, the first decline for that industry since the Labor Department began reporting the data in 1980.þþ
Source: NY Times
