The Employment Cost Index, the broadest measure of labor costs, increased 0.4 percent after advancing 0.5 percent in the second quarter, the Labor Department said on Tuesday.
Economists polled by Reuters had expected labor costs to increase 0.5 percent. In the 12 months through September, compensation costs rose 1.9 percent for a fifth straight quarter.
During periods of strong economic growth, the U.S. central bank closely monitors the index for signs of wage inflation.
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High unemployment amid a tepid economic recovery is keeping a lid on wage pressures.