U.S. Employment Costs Increased at Faster Pace in Fourth Quarter

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U.S. employment costs rose more than forecast in the fourth quarter as worker pay increases accelerated while benefit gains held firm.

The employment cost index, a broad gauge monitored by the Federal Reserve, climbed 0.7% from the prior quarter, the fastest pace since the first three months of the year, according to Labor Department data released Friday that topped the median estimate in a Bloomberg survey of economists that called for 0.5%. The gauge increased 2.5% from a year earlier, also an acceleration.

The report shows employers may be more willing to offer greater wage gains amid the weak labor market, suggesting cost pressures for companies are muted.

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