Labor costs in the U.S. fell in the third quarter of 2023, reports.

What鈥檚 going on: 鈥淯nit labor costs, a measure of hourly compensation against productivity, fell 0.8% for the July-through-September period at a seasonally adjusted rate. Economists surveyed by Dow Jones had been looking for a gain of 0.7%. On a 12-month basis, unit labor costs increased 1.9%. The breakdown reflected a 3.9% increase in hourly compensation, offset by a 4.7% rise in productivity.鈥�

• The productivity increase鈥攚hich surpassed economists鈥� expectations鈥攊ncluded a rise in both output and hours worked.

The backdrop: The news came on the heels of the Federal Reserve鈥檚 decision Wednesday to leave interest rates unchanged.

• 鈥淥n Wednesday, Fed Chair Jerome Powell said wage gains 鈥榟ave really come down significantly over the course of the last 18 months to a level where they鈥檙e substantially closer to that level that would be consistent with 2% inflation over time,鈥� the central bank鈥檚 target.鈥�