Employment Costs Up Modestly In Second Quarter

WASHINGTON (Reuters) - Labor costs rose moderately in the second quarter, according to government data on Tuesday that underscored benign wage inflation against the backdrop of a weak jobs market.

The Employment Cost Index, which measures total employer compensation costs, increased 0.5 percent after rising 0.4 percent in the first three months of the year, the Labor Department said.

The increase was in line with economists' expectations. Over 12 months, compensation costs rose a moderate 1.7 percent, slowing from a 1.9 percent rise in the 12 months through March.

During periods of strong economic growth, the Federal Reserve closely monitors the index for signs of wage inflation. Labor market weakness, marked by an 8.2 percent unemployment rate, is keeping wage inflation subdued.

Wages and salaries for civilians, which account for 70 percent of employment costs, rose 0.4 percent in the second quarter. They had increased 0.5 percent in the prior period.

Compared to the second quarter of 2011, wages and salaries increased 1.7 percent.

Benefits rose 0.6 percent from April to June and were up 2.1 percent compared to the same period last year.

Employment costs for private sector workers increased 0.5 percent during the quarter. Employer costs for health benefits increased 2.4 percent compared to the same period a year ago. percent.

Employment costs for state and local government workers increased 0.5 percent, slowing from a 0.7 percent rise the first quarter.

(Reporting By Lucia Mutikani; Editing by Neil Stempleman)

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Description : The Employment Cost Index, which measures total employer compensation costs, increased 0.5 percent after rising 0.4 percent in the first three months of the year, the Labor Department said.
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