Construction workers at a project in the Upper East Side neighborhood of Manhattan, NY on Oct. 6th, 2023.
Adam Jeffery | CNBC
The cost of labor unexpectedly declined in the third quarter, providing at least some relief on the inflation front, the Labor Department reported Thursday.
Unit labor costs, a measure of hourly compensation against productivity, fell 0.8% for the July-through-September period at a seasonally adjusted rate. Economists surveyed by Dow Jones had been looking for a gain of 0.7%. On a 12-month basis, unit labor costs increased 1.9%.
The breakdown reflected a 3.9% increase in hourly compensation, offset by a 4.7% rise in productivity.
That increase in productivity also was more than expected, beating the Dow Jones estimate for a rise of 4.3% for the biggest quarterly gain since the third quarter of 2020. Output climbed 5.9%, while hours worked rose 1.1%.
The developments come as the Federal Reserve is seeking to tamp down inflation through a series of interest rate increases.
On Wednesday, Fed Chair Jerome Powell said wage gains “have really come down significantly over the course of the last 18 months to a level where they’re substantially closer to that level that would be consistent with 2% inflation over time,” the central bank’s target.
In other economic news Thursday, initial filings for unemployment benefits for the week ended Oct. 28 totaled a seasonally adjusted 217,000, up 5,000 from the previous period and higher than the 214,000 estimate, the Labor Department said in a separate report.
Continuing claims, which run a week behind, totaled 1.82 million, an increase of 35,000 and higher than the 1.81 million FactSet estimate.