U.S. Labor Costs Show Unexpected Slowdown in Q4

U.S. labor costs experienced an unexpected slowdown in growth during the fourth quarter, as a decrease in labor demand curbed wage increases. According to Jin10, the U.S. Department of Labor's Bureau of Labor Statistics reported on Tuesday that the Employment Cost Index (ECI), the broadest measure of labor costs, rose by 0.7% in the last quarter of the previous year, compared to a 0.8% increase in the third quarter. Over the 12 months ending in December, labor costs grew by 3.4%, marking the smallest annual increase since the second quarter of 2021. In contrast, the 12 months ending in September saw a 3.5% rise. Policymakers consider the ECI a key indicator for assessing labor market weakness and predicting core inflation, as it adjusts for changes in employment structure and job quality.