Employment costs continued their steady rise in the third quarter of 2025, with the Employment Cost Index (ECI) increasing by 0.8% from June to September, slightly below the prior quarter’s 0.9%. This matched estimates, although wages grew at a more modest pace of 0.8% compared to 1.0% in the previous quarter. Employment benefits also rose by 0.8%, up from 0.7% in the prior quarter.

On a year-over-year basis, civilian worker compensation increased by 3.5%, driven equally by wages and salaries and benefits, each up 3.5%. In the private sector, total compensation also rose 3.5%, with wages and salaries slightly higher at 3.6%. Real, inflation-adjusted wages improved modestly by 0.6%, signalling a slight gain in purchasing power.

State and local government compensation grew by 3.6% year-on-year, supported by a 3.8% increase in benefits and a 3.5% rise in wages and salaries. Real wages in this sector rose by 0.5%.

The data release was delayed by more than five weeks due to the federal government shutdown, which impacted survey response rates. The next Employment Cost Index report, covering the December 2025 quarter, is scheduled for release on 10 February 2026.

For forex traders, the encouraging takeaway is that employment compensation growth continues to outpace the Consumer Price Index inflation rate, which stands around 3.0%. This suggests real wages are increasing, potentially supporting stronger consumer spending and economic growth—factors that could influence currency valuations going forward.

Original Source: Greg Michalowski of investinglive.com