UPDATE 1-US Q1 employment cost growth is weakest on record

WASHINGTON, April 30 - U.S. employment costs rose by the lowest amount on record in the first quarter, government data showed on Thursday, as the country's severe recession dented compensation amid soaring unemployment.

The Labor Department's Employment Cost Index, a broad measure of wages and benefits, increased by just 0.3 percent between January and March following a 0.6 percent rise in the final three months of 2008. Analysts polled by Reuters had forecast employment costs would rise by 0.5 percent.

It was the weakest quarterly advance in U.S. employment costs since records for this series began in June 1982, a Labor Department official said.

Wages and salaries edged up 0.3 percent in the first quarter, which was also the weakest performance on record, while benefit costs increased by 0.5 percent.

Companies battling the worst recession in a generation have been stinting on overtime and cutting back on worker benefits and pension contributions to shield profits and make sure that they stay in business until growth picks up again.

In the year to March, employment costs rose 2.1 percent, slowing sharply from the 3.3 percent rise notched in the year to March 2008. Wages and salaries rose by 2.2 percent in the year to March, back from a 3.2 percent gain in the year to March 2008. The rise in both measures was also the lowest on record.