Washington U.S. workers' wages and benefits rose at a slower pace in the second quarter as the sluggish economy translated into less-generous compensation packages.
The employment cost index, a closely watched gauge of inflation, rose 0.9 percent in the April-June quarter, down from a seasonally adjusted 1.1 percent rise in the previous quarter, the Labor Department reported Thursday.
The smaller-than-expected second-quarter advance marked the weakest showing since last year's fourth quarter, when compensation also rose by 0.9 percent.
Economists said the moderation reflects the toll of the yearlong economic slowdown and weaker demand for labor.
"The boss is less likely to grant that raise, and workers are going to be more afraid to ask for one," said Clifford Waldman, economist for Waldman Associates.
"That's why I expect to see pressure on wages and benefits continue to cool in the next quarter or two."
For the larger economy, slower compensation growth bodes well for keeping inflation contained, economists said.
The wages and salaries component of the employment cost index, viewed by economists as the best measure of changes in workers' compensation, also grew by 1 percent in the second quarter, matching the increase in the prior quarter.
For the 12 months ended June 30, Americans' wages and benefits rose by 3.9 percent, a much slower pace than the 4.4 percent rise in the same period a year ago.