U.S. employment costs rise 0.8% in Q3, slower than Q2; annual wage growth eases to 3.1%
The employment cost index for civilian workers rose 0.8% in the third quarter after 0.9% in the second, with wages and salaries up 0.7%, a sign that labor-cost pressure on inflation keeps easing.
The Bureau of Labor Statistics said at 8:30 a.m. ET Friday that compensation costs for civilian workers rose 0.8% in the three months to September (seasonally adjusted), down from 0.9% in the June quarter.
| Civilian workers | Q3 2026 (q/q) | Q2 2026 (q/q) | 12 months to Sept. |
|---|---|---|---|
| Total compensation | 0.8% | 0.9% | 3.4% |
| Wages and salaries | 0.7% | 0.9% | 3.1% |
| Benefits | 0.9% | 1.0% | 3.9% |
Why it matters — The ECI is the labor-cost gauge the Federal Reserve watches most closely because it adjusts for shifts in the mix of jobs. A quarterly wage gain of 0.7% is close to an annual pace consistent with the Fed’s 2% inflation goal, which supports the view that the job market is no longer a major source of inflation pressure.
Market reaction — The release came as stock futures were already lower on the Amazon and Intel results, so the tech selloff rather than wages is driving the open; the data mainly matters for rate expectations.
WMR data — See the 2-year/10-year yield spread, the dollar index and the VIX on Market pulse for how rate markets take the softer labor-cost reading.
What to watch next — Private-sector wage trends in the next jobs report and how Fed officials describe labor-market cooling in upcoming speeches.
Sources
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