The Pak Banker - - BUSINESS -

US la­bor costs in the sec­ond quar­ter recorded their small­est in­crease in 33 years as work­ers earned less in com­mis­sions and bonuses, in what ap­peared to be a tem­po­rary wage growth set­back against the back­drop of di­min­ish­ing la­bor mar­ket slack.

The sur­pris­ingly smaller rise re­ported by the La­bor Depart­ment on Fri­day did lit­tle to tem­per ex­pec­ta­tions that the Fed­eral Re­serve is set to raise in­ter­est rates later this year. The job mar­ket is fast ap­proach­ing full em­ploy­ment. "La­bor mar­ket fun­da­men­tals are im­prov­ing, job open­ings are at record highs, and slack on a steady down­trend. This is pre­cisely how the Fed will in­ter­pret this re­port, even if the num­bers here are atro­cious," said Eric Green, chief economist at TD Se­cu­ri­ties in New York. The Em­ploy­ment Cost In­dex, the broad­est mea­sure of la­bor costs, edged up 0.2 per­cent in the sec­ond quar­ter, the La­bor Depart­ment said. That was the small­est gain since the se­ries started in the sec­ond quar­ter of 1982 and fol­lowed a 0.7 per­cent rise in the first quar­ter.

The weak­ness in com­pen­sa­tion was con­cen­trated in sales, in­for­ma­tion and whole­sale trade, oc­cu­pa­tions where work­ers are likely to re­ceive in­cen­tive pay. Com­mis­sions and bonuses helped lift worker com­pen­sa­tion at the start of the year. Ex­clud­ing com­mis­sions, com­pen­sa­tion was up 0.6 per­cent in both the first and sec­ond quar­ters, ac­cord­ing to TD Se­cu­ri­ties. Econ­o­mists had forecast the em­ploy­ment cost in­dex, widely viewed by pol­i­cy­mak­ers and econ­o­mists as one of the bet­ter mea­sures of la­bor mar­ket slack, ris­ing 0.6 per­cent in the sec­ond quar­ter. At 5.3 per­cent, the un­em­ploy­ment rate is close to the 5.0 per­cent to 5.2 per­cent range that most Fed of­fi­cials con­sider con­sis­tent with full em­ploy­ment.

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