Wages and salaries for allcivilian workers rose 3.1 percent from a year earlier, the mostsince 2008.

U.S. employment costs rose less than forecast in the fourthquarter as wage and salary gains cooled, adding to signsthat inflation pressures remain mild despite a strong job market.

The employment cost index, a broad gauge monitored by theFederal Reserve, increased 0.7 percent in the October-Decemberperiod from the prior quarter, according to Labor Department datareleased Thursday. That compared with the median estimate ofeconomists for a 0.8 percent increase. Wages and salaries rose 0.6percent following a 0.9 percent gain in the prior period.

Related: Power shift has cost wage earners $1.5 trillionsince 2015

Key insights:

• While employers are paying more and boosting benefits to retainworkers as it becomes ever harder to hire, the data show littlesign of a major pickup in compensation. Among private workers, thedeceleration in the index over the quarter was more pronounced,with a 0.6 percent increase.
• At the same time, compensation costs have risen enough to helppush the employment-cost index up 2.9 percent from a year earlier,the most since 2008.
• The lack of a big acceleration in labor costs reinforces theFed's decision this week to indicate it will forgo interest-ratehikes for at least a while as various global risks mount. Policymakers on Wednesday cited “muted inflation pressures” as theyshifted to a patient approach to future rate moves following fourhikes in 2018.
• Growth in average hourly earnings, a separate monthly measureof private-sector wages that can be influenced by shifts inindustry employment and hours worked, recently picked up above 3percent for the first time since the economic expansion began.
• Wages and salaries for all civilian workers rose 3.1 percentfrom a year earlier, the most since 2008. For private workers, theywere also up 3.1 percent from a year earlier, the same as the priorquarter.
• A separate Labor Department report on Thursday showed filingsfor unemployment benefits jumped last week to the highest sinceSeptember 2017, possibly reflecting holiday- related swings and thepartial government shutdown.
• The government's quarterly ECI reading covers employer-paidtaxes such as Social Security and Medicare in addition to the costof wages and benefits.

Read more:

• Millennial women returning to labor market indroves
• December hiring topped forecasts, wagessurged
• How much employers spend on their top 5benefits

Copyright 2019 Bloomberg. All rightsreserved. This material may not be published, broadcast, rewritten,or redistributed.