Jul 31, 2012 09:32 AM EDT

Employment Costs Rose Diffidently in Second Quarter

Labor costs have increased reasonably in the second quarter, according to government data that emphasized benevolent wage inflation against the backdrop of a weak jobs market.

According to the Labor Department the Employment Cost Index, which is used to measure total employer compensation, has increased 0.5 percent after rising 0.4 percent in the first three months of the year.

The increase was parallel to what economists were already expecting. A moderate rise in compensation cost of 1.7 percent over a 12 months, slowing from a 1.9 percent rise in the 12 months through March.

The Federal Reserve begins to intricately monitor the index for signs of wage inflation during periods of the strongest economic growth. However, Labor market feebleness, marked by an 8.2 percent unemployment rate is keeping wage inflation restrained.

First quarter numbers show that wages and salaries for civilians, which account for 70 percent of employment cost had increased to 0.5 percent and then downsizing to 0.4 percent in the second quarter.

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

Benefits have continued to rise. Records show a 0.6 percent increase from April to June and were up 2.1 percent, proving better results than the same period last year.

Private sector worker employment cost rose 0.5 percent during the quarter. Health benefits for employer cost increased 2.4 percent, compared to the same period a year ago.

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

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