US workers' compensation rose 0.6 per cent in the third quarter after a 0.8 per cent gain in the previous three-month period reflecting lower growth in both pay and benefits, the Labour Department said yesterday.

The overall increase in compensation during the July September period included a 0.6 per cent rise in wages and salaries and a 0.6 per cent rise in the cost of benefits, such as health care, received by employees, the department said.

At the same time, US consumer confidence in the economy fell to the weakest level in four months in October, the Conference Board reported.

The business research group said its consumer confidence index declined to 106.2 in October from 111.8 in September. It was the lowest reading since 100.1 in June, the group said.

A dimmer forecast for future business conditions dragged down the overall index.

The overall increase in employee compensation costs in the third quarter, which was the smallest in a year, was below the 0.8 per cent rise expected by Wall Street economists.

"It's decidedly less than anyone had expected. This tells us there is no evidence that labour costs are creating an inflation threat," said Mr David Resler, chief economist at Nomura Securities International.

In the past 12 months, the department's Employment Cost Index, which measures changes in the value of wages and salaries and the cost of employee benefits for the American work force, rose by 2.8 per cent, little changed from the 2.7 per cent gain of the previous 12-month period.