Wages and benefits paid to U.S. civilian workers grew at a steady pace during the final three months of 2016.
The Labor Department said Tuesday that total compensation rose 0.5 percent from October through December, a tad slower than 0.6 percent growth in the July-September period. Wages and salaries increased 0.5 percent, benefits 0.4 percent.
In the 12 months that ended Dec. 31, compensation increased 2.2 percent, up from an annual gain of 2 percent a year earlier.
The report — known as the Employment Cost Index — has shown improvement as more Americans are finding jobs and the unemployment rate has fallen to 4.7 percent. Still, the pace of income growth suggests that employers have yet to face pressure to raise wages significantly because there are too few people searching for work, said Richard Moody, chief economist at Regions Financial.
"While wage growth as measured by the ECI has accelerated modestly over recent quarters, it nonetheless remains below the pace of growth that would be seen in a fully healthy labor market," Moody said.
Wages and salaries, which account for 70 percent of compensation, were up 2.3 percent in the fourth quarter from a year earlier, and benefits rose 2.1 percent.
Among the sectors that recorded the largest compensation gains in the fourth quarter were management, transportation and warehousing and aircraft manufacturing.
Over the past 12 months, state and local government workers have seen their compensation rise at a faster rate than workers in the private sector largely because of increases in benefits.