US labor costs growth cools in fourth quarter

Reuters

Tue, February 10, 2026 astatine 8:08 AM CST 2 min read

WASHINGTON, Feb 10 (Reuters) - Growth successful U.S. labour costs unexpectedly slowed successful the 4th quarter, starring to the smallest yearly ​increase successful 4-1/2 years, arsenic softening request for labour restrained ‌wage gains.

The Employment Cost Index (ECI), the broadest measurement of labour costs, roseate 0.7% past 4th ‌after advancing 0.8% successful the July-September quarter, the Labor Department's Bureau of Labor Statistics said connected Tuesday. Economists polled by Reuters had forecast the ECI rising 0.8%.

Labor costs accrued 3.4% successful the 12 months done December, ⁠the smallest summation since the ‌second 4th of 2021. They roseate 3.5% successful the twelvemonth done September.

The ECI is viewed by policymakers arsenic ‍one of the amended measures of labour marketplace slack and a predictor of halfway ostentation due to the fact that it adjusts for creation and job-quality changes.

A lackluster labour marketplace ​is curbing wage growth. The authorities reported past week that determination ‌were 0.87 occupation openings for each unemployed idiosyncratic successful December compared to 0.89 successful November. That ratio has dropped from astir 1.08 a twelvemonth ago.

Though wage pressures person diminished, import tariffs person raised goods prices, keeping ostentation elevated.

Economists expect the Federal Reserve to clasp involvement rates dependable ⁠through the archetypal fractional of the year. ​The U.S. cardinal slope past period near ​its benchmark overnight involvement complaint successful the 3.50%-3.75% range.

Wages and salaries, which relationship for the bulk of labour costs, ‍rose 0.7% past 4th ⁠after expanding 0.8% successful the July-September quarter. They precocious 3.3% connected an yearly ground aft expanding 3.5% successful the 12 months ⁠through September. When adjusted for inflation, wide wages roseate 0.7% successful the 12 months ‌through December aft climbing 0.6% successful the 3rd quarter.

(Reporting by ‌Lucia Mutikani; Editing by Mark Porter)