US labor costs growth slows in second quarter

U.S. labor costs increased less than expected in the second quarter as wage growth cooled a bit, offering a boost to the Federal Reserve in the fight against inflation.

The Employment Cost Index, the broadest measure of labor costs, rose 1.0% last quarter after advancing 1.2% in the January-March period, the Labor Department said on Friday.

Economists polled by Reuters had forecast the ECI rising 1.1%. Labor costs increased 4.5% on a year-on-year basis after shooting up 4.8% in the first quarter.

The ECI is widely viewed by policymakers and economists as one of the better measures of labor market slack and a predictor of core inflation, because it adjusts for composition and job-quality changes.

The Fed on Wednesday raised its policy rate by 25 basis points to the 5.25%-5.50% range, a level last seen just prior to the 2007 housing market crash and which has not been consistently exceeded for about 22 years.