The U.S. isn't the only country keeping a lid on labor costs. Robert Minikin of Bankers Trust Co. notes that trade unions across Europe are exhibiting "a pragmatic and cautious approach in negotiating new pay deals, despite the economic upswing."

In Britain, for example, unit labor costs are declining at roughly 1.5% a year, reports Minikin. And in Germany, where the prospect of major workforce reductions has wrung real wage declines from unions, unit labor costs at last count were running nearly 11% below their year-ago level.

They are headed down in France and Italy as well. In July, the Organization for Economic Cooperation & Development predicted that European Union costs would rise by just 0.7% this year, but Minikin thinks a marginal decline now looks more likely.

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