An auto factory worker installs equipment on a vehicle at Chrysler's Belvidere, Ill., assembly plant. File Photo by Brian Kersey/UPI | License Photo
Oct. 31 (UPI) -- Labor costs and wages in the United States increased more than expected in the third quarter of this year -- a sign higher inflation may also be on the way, new Labor Department figures showed Wednesday.
The department's employment cost index jumped 0.8 percent, beating economists' estimates of 0.7 percent.
Wages and salaries for civilian workers increased nearly 1 percent, while benefits costs jumped 0.4 percent. Wages and salaries make up 70 percent of compensation costs and benefits take the remaining 30 percent.
Total compensation for civilian workers in the United States increased 2.8 percent over the last 12 months, the report said -- up from 2.5 percent.
In the private sector, compensation climbed nearly 3 percent over the last year, wages and salaries jumped 3.1 percent and benefits 2.5 percent, the department reported. State and local government workers saw their wages rise 2.5 percent over the past year. The consumer price index climbed 2.3 percent in that time.
Wednesday's figures came as national unemployment hovers at 3.7 percent, the lowest since 1969.
The rise has some economists worried higher inflation may not be far behind.
"Going forward, data on inflation will be critical for the Fed," Ryan Sweet, director of real-time economics at Moody's Analytics, said.
There's a delicate balance between raising interest rates, which hurts consumer borrowing, and allowing inflation to rise.
Last month, the Federal Reserve raised interest rates in an effort to restrict inflation. The Personal Consumption Expenditure deflator, the Fed's preferred gauge for inflation, climbed by 1.6 percent in the third quarter.
Moody's and ADP reported Wednesday that private payroll grew by 227,000 this month, surpassing Wall Street expectations.