US Labor Costs Rise at Slowest Pace in 30 Years

US labor costs rose a seasonally adjusted 0.2% in the spring, the slowest pace in three decades. It is the slowest quarterly gain since record keeping began in 1982. Economists were expecting a 0.6% increase. The slow wage growth could affect the Fed’s decision to raise short-term interest rates. Fed officials anticipated an acceleration in wages to signal the labor market is healthy after the recession and could withstand an increase in borrowing costs.

The figures suggest that slack remains in the labor market despite signs that workers’ wages were picking up and a sharp drop in unemployment.

“At this stage of the business cycle, with significant improvement in the labor market, wage growth should be accelerating,” PNC economists Stuart Hoffman and Gus Faucher said in a note to clients. “Weak wage growth is also somewhat puzzling given recent announcements from big companies, such as Wal-Mart and Target, that they are raising workers’ pay.”

Source: The Wall Street Journal