By Courtney Schlisserman Oct. 30 (Bloomberg) -- Employment expenses in the U.S. rose 0.4 percent in the third quarter and wages had the smallest 12- month gain since 1982, as the sluggish labor market restrains compensation. The increase in the employment cost index was the same as the gain in the second quarter, according to Labor Department data released today. A 0.3 percent increase in the first quarter was the smallest since records began in 1996. Companies probably will keep curtailing labor costs, which account for about two-thirds of corporate expenses, even as the economy emerges from the recession. With the unemployment rate forecast to rise, employees have little room to negotiate pay and benefit increases. “Workers in general don’t have a lot of bargaining power and businesses, in a high unemployment environment, are using less overtime and in some cases part time,” to contain costs, Stuart Hoffman, chief economist at PNC Financial Services Group, said before the report. “For those who are getting wage increases, companies are skimming them down.” Economists forecast the index would increase 0.4 percent, according to the median of 57 projections in a Bloomberg News survey. Estimates ranged from gains of 0.2 percent to 0.7 percent. The employment cost gauge measures the cost to companies of wages, benefits and employer-paid taxes such as Social Security and Medicare. Wages and salaries, which account for about 70 percent of total employment costs, increased 0.4 percent, compared with a 0.4 percent rise in the second quarter. From a year earlier, these costs rose 1.5 percent, the smallest gain since 1982. Benefits Benefit costs, which include some bonuses, severance pay, health insurance and paid vacations, gained 0.4 percent after a 0.3 percent increase from April through June. In the past 12 months, benefit costs were up 1.6 percent. Among private companies, total compensation costs increased 0.5 percent, compared with a 0.2 percent advance in the second quarter. Compensation for state and local government employees was unchanged in the third quarter. Even as other parts of the economy show signs of stabilizing, rising unemployment may keep overall wages and benefits subdued and weigh on consumer spending. The U.S. has lost 7.2 million jobs since the recession began in December 2007, and the government is scheduled to release the October payrolls report on Nov. 6. Growth Resumes The economy expanded at a 3.5 percent pace from July through September, exceeding the median estimate of economists surveyed by Bloomberg News, after shrinking the previous four quarters, figures from the Commerce Department showed yesterday. Household purchases climbed 3.4 percent, the most in more than two years. Personal income in the third quarter fell at a 0.5 percent pace, following a 0.6 percent increase the prior three months, according to data from the Commerce Department released yesterday. The Federal Reserve’s most-recent Beige Book regional survey, released Oct. 21, suggested that the economy is gaining momentum and has not yet overcome weaknesses in banking and employment. The U.S. central bank’s Federal Open Market Committee next meets in Washington Nov. 3-4. US Airways Group Inc., the smallest full-fare U.S. airline, said Oct. 28 it will cut 1,000 jobs as it cuts flights and bases. The job losses account for about 3 percent of the workforce and will come in the first half of 2010.

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