Labor Department: Employment costs increase slows to 1% in 4Q

Jan. 31 (UPI) -- Employment costs for U.S. businesses rose slightly less than anticipated in the fourth quarter of 2022 as federal officials continue to watch such indicators for possible breaks in inflation.

Employment costs increased 1%, under the 1.1% projected by Dow Jones economists, the Labor Department said in its Employment Cost Index Summary released Tuesday. That cost jumped 1.2% in the third quarter.

The employment cost index, which measures the change in total employee compensation, is one of the key statistics regularly watched by the Federal Reserve for signs of inflation.

Wages and salaries increased by 1% in the final quarter of 2022 while the cost of benefits increased by 0.8%, both down from the third quarter.

The Labor Department said that while the compensation for private business employees increased by 5.1% for the calendar year 2022, when adjusted for inflation, private wages and salaries declined by 1.2%. Benefits for private workers also dropped 1.5% when adjusted for inflation.

Industries receiving the largest compensation cost increases for 2022 included 4.2% for those working in natural resources, construction and maintenance occupations to 6.9% for service occupations.

In "supersector" industries, construction workers saw a 4.3% bump in pay while those working in leisure and hospitality saw an increase of 6.4%.

The Labor Department said compensation costs for state and local government employees increased 4.8% compared to 2.6% in 2021. Compensation for all civilian employees increased 5.1% over the past 12 months compared to 4% in the previous years.