WAGES and benefits of US workers grew by a moderate 0.8 per cent in the second quarter, matching the first quarter increase, according to US Labour Department figures released yesterday.

The rise in overall worker compensation was slightly slower than analysts had expected and should help quiet, but not extinguish, financial market fears of higher inflation due to wage increases.

Economists said the report supports the view that the Federal Reserve does not need to raise interest rates soon to keep inflation in check. But they noted that the report was only the first of three due this week, the most important being Friday's July jobs report.

The second quarter rise in worker compensation was driven by a 0.9 per cent jump in wages and salaries. It followed a 1 per cent rise in wages and salaries in the first quarter, the largest increase in nearly five years.

Data on labour costs normally does not receive much attention but Reserve chairman, Mr Alan Greenspan, had earlier warned that the sharp jump in wages in the first quarter could be a harbinger of higher inflation.