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Labor costs increase by 1%
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October 29, 1998: 9:23 a.m. ET
Wages push higher, reflecting overall trend of tightness in the labor market
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NEW YORK (CNNfn) - The U.S. labor market showed more signs of heating up Thursday as the Department of Labor said employment costs kept climbing while the number of workers seeking unemployment benefits fell sharply.
The employment cost index gained a full percentage point in the third quarter, following a 0.8 percent increase in the second quarter. Economists had expected a more gradual increase of 0.8 percent.
Once considered one of Federal Reserve chief Alan Greenspan's favorite policy-making economic gauges, the index measures wage and price increases over the preceding three-month period.
Over the past 12 year, combined pay and benefits climbed 3.7 percent, up from last quarter's moving 12-month figure of 3.5 percent.
Increases in wages and salaries picked up momentum in the quarter, rising 1.2 percent from last quarter's rate of 0.9 percent. Benefit costs, however, remained flat at 0.8 percent.
Separately, the number of U.S. citizens filing for unemployment benefits for the first time dipped 18,000 to 301,000 in the week ended Oct. 24, down from last week's revised figure of 319,000.
Economists had expected a much narrower decline to 315,000.
The 4-week moving figure, a broader and hence somewhat more reliable indicator of the labor market's current strength, rose to 309,250 from 306,500 in the previous week.
Continuing claims fell to 2.16 million from 2.21 million.
The Federal Reserve closely watches the employment-cost index for warning signs that the economy may be overheating, in which case it may move to hike interest rates.
However, the bond market remained unconvinced that the labor market's strength would prevent an economic slowdown. Instead, the 30-year Treasury bond followed its early morning steady course to trade flat, down 1/32 to yield 5.15 percent. 
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