Key facts
- U.S. labor costs rose 0.9% in the second quarter, exceeding economists' forecasts.
- Annual labor costs increased 3.4% through June.
- Wages and salaries, a key component of labor costs, rose 0.9% in the second quarter.
- The Federal Reserve maintained its benchmark interest rate at 3.50%-3.75%, with three members dissenting.
- US inflation slowed in June, with the PCE Price Index increasing 3.7% year-over-year.
- Renewed Middle East conflict is expected to increase oil prices, potentially impacting inflation.
U.S. labor costs rose slightly more than expected in the second quarter, with private-sector wage growth picking up. The Employment Cost Index (ECI), a broad measure of labor costs, climbed 0.9% in the quarter, exceeding economists' forecasts of 0.8%. Annually, labor costs increased 3.4% through June.
Wages and salaries, which constitute the majority of labor costs, increased by 0.9% in the second quarter and 3.2% over the past 12 months. This data comes as the Federal Reserve maintained its benchmark interest rate in the 3.50%-3.75% range on Wednesday, though three policy-setting members dissented, preferring a quarter-percentage-point hike.
Meanwhile, U.S. inflation slowed in June, but rising oil prices due to Middle East conflict may make this trend temporary. Japan's core inflation in Tokyo accelerated to 1.9% in July, driven by the conflict, keeping the Bank of Japan on track to consider rate hikes.