The gain was an increase from the second quarter's 0.6% advance and matched expectations of economists surveyed by The Wall Street Journal.
Some have argued that companies were holding off on increasing wages because they were having to put more money toward benefits, but the Employment Cost Index also tracks benefits costs, and those have not risen as much as wages.
The Labor Department's closely watched monthly employment report on Friday also showed the unemployment rate was steady at a 49-year low of 3.7 percent as 711,000 people entered the labor force, in a sign of confidence in the jobs market.
A measure of compensation that includes benefits and covers all workers, including government employees, rose 2.8 percent in the third quarter from a year earlier, the Labor Department report said.
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Employment gains averaged 218,000 jobs per month over the past three months, double the roughly 100,000 needed to keep up with growth in the working-age population. Although this is good news for employees, the Federal Reserve has been raising rates in a speedy fashion to guard against future inflationary pressures, seemingly erasing big salary and hourly payroll gains. There are a record 7.1-M job unfilled openings in the economy.
But the anticipated bounce back in job growth is likely to be tempered some what by Hurricane Michael, which struck the Florida Panhandle in mid-October. That followed a 2.9 percent gain in the year to June.
Firming wages support views that inflation will hover around the Fed's 2.0 percent target for a while.
Sustained labor market strength eased fears about the economy's health following weak housing and business spending data.
"The report shows a booming US economy with a sufficient whiff of wage inflation to keep the Fed on track to raise rates in December and at least twice next year", said David Kelly, chief global strategist at JPMorgan Funds in NY.
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"The strength in the ADP report supports our view that the underlying trend in the labor market remains upbeat", said Daniel Silver, an economist at JPMorgan in NY. The consumer-price index rose 2.3% from a year earlier in September, the Labor Department said.
Employers also increased hours for workers last month.
With 3.7 percent unemployment, some economists view the jobs market as being close to or at full employment. They were up 3.1 percent in the 12 months through September, the biggest increase since the second quarter of 2008. Many economists expect that will be above 3 percent for the first time since April 2009.
Manufacturing expanded by 17,000 jobs and construction gained just as many. Most of the wage growth in the Employment Cost Index is coming from service-sector jobs. This article is strictly for informational purposes only.
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