(Bloomberg) -- U.S. employment costs exceeded forecasts at the start of the year, registering the biggest quarterly gain on record and heightening concerns about persistent inflation that sets the stage for more forceful policy action by the Federal Reserve. 

The employment cost index, a broad gauge of wages and benefits, advanced 1.4% in the first quarter, according to Labor Department figures released Friday. That followed a 1% advance seen in the final months of 2021.

The median projection in a Bloomberg survey of economists called for a 1.1% increase.

Compared with a year earlier, the labor costs measure jumped 4.5%. Unlike the earnings measures in the monthly jobs report, the ECI is not distorted by employment shifts among occupations or industries.

Compensation gains last quarter were broad-based across industries, including strong advances in manufacturing and at service providers.

Wages and salaries for civilian workers climbed 4.7% from a year earlier, also the most on record. Excluding government, private wages increased 5% from a year earlier. 

The stretch of healthy gains in employment costs underscores how rising wages are a key part of the inflationary picture, and if sustained, will keep pressure on the Fed to take a more aggressive approach to policy. In March, Fed Chair Jerome Powell said the current pace of pay increases is not consistent with the central bank’s 2% inflation goal. 

Even so, workers wages’ aren’t keeping pace with decades-high inflation, squeezing households and threatening to slow consumption. 

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