The Employment Cost Index, the broadest measure of labor costs, increased 0.6 percent after an unrevised 0.6 percent gain in the third quarter, the Labor Department said on Friday.

The increase was in line with expectations. Wages and salaries, which account for 70 percent of employment costs, also rose 0.6 percent in the fourth quarter after a similar gain in the prior period.

In the 12 months through December, wages and salaries increased 2.1 percent, still below the 3 percent threshold that economists say is needed to bring inflation closer to the Federal Reserve's 2 percent target.

The ECI is widely viewed by policymakers and economists as one of the better measures of labor market slack. It is also considered a better predictor of core inflation.

The ECI report showed benefits increased 0.7 percent in the fourth quarter after rising 0.5 percent in the third quarter. In the 12 months through December, benefits were up 1.7 percent.

(Reporting By Lucia Mutikani; Editing by Andrea Ricci)