Wages and benefits for U.S. workers grew more slowly in the April-June quarter than in the first three months of the year, a trend that could keep price pressures in check and encourage inflation fighters at the Federal Reserve.
WASHINGTON — Wages and benefits for U.S. workers grew more slowly in the April-June quarter than in the first three months of the year, a trend that could help contain price pressures and boost demand for labor. inflation fighters at the Federal Reserve.
Compensation, as measured by the government’s Employment Cost Index, rose 0.9% in the second quarter, down from a 1.2% increase in the previous quarter, the Labor Department said. said on wednesdayCompared to the same quarter a year earlier, compensation growth was 4.1%, down slightly from 4.2% in the first quarter.
Higher wages and benefits are good for workers, but slower wage growth will likely reassure Fed officials that inflation is steadily falling toward their 2% target. Fast wage growth could lead many companies to raise prices to offset higher labor costs.
Inflation is also cooling, so inflation-adjusted wage and benefit growth is actually accelerating. It rose 1.1% from a year ago in the second quarter, up from 0.8% in the previous three months.
The Fed is expected to leave its key short-term interest rate unchanged after its latest policy meeting concludes later on Wednesday. However, Fed officials are also likely to signal that the first rate cut in four years is on the horizon, likely at its next meeting in September.