U.S. third-quarter labor costs grew less than initially estimated after a downwardly revised decline in the prior three months, adding to evidence the job market is no longer a source of inflationary pressure.

Unit labor costs, or what a business pays employees to produce one unit of output, increased at a 0.8% annualized rate from July through September, following an revised 1.1% decrease in the prior period, data from the Bureau of Labor Statistics showed Tuesday.

The initial labor costs reading had shown 1.9% gain in the third quarter. The adjustments to both periods reflected downward revisions to hourly compensation.

Productivity, or nonfarm business employee output per hour, rose at an unrevised 2.2% annualized rate in the July-to-September period after rising at a 2.1% pace in the prior quarter.

Hourly worker compensation, unadjusted for inflation, rose at a 3.1% in the third quarter — 2.2 percentage points less than initially estimated. Second-quarter compensation growth was revised down sharply.

The figures indicate productivity-enhancing efforts are helping alleviate the impact of still-elevated operating costs, reducing pressure on companies to raise prices. That’s a comforting development for Federal Reserve policymakers against a backdrop of inflation that has proved stubborn in recent months.

November figures on Wednesday are expected to show a fourth straight 0.3% increase in the consumer price index excluding food and fuel. The data will be the last major inflation data point before the Fed’s final policy meeting of the year on Dec. 17-18.

On a year-over-year basis, unit labor costs were up 2.2%, the smallest annual advance since 2023. Productivity increased 2%.

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