Yearly pay hikes have dropped from a year ago.

The Bureau of Labor Statistics reported that average annual pay increases have fallen to 3.5% from 5% over the past 12 months, but workers still are keeping ahead of inflation. Annual pay raises for white-collar workers averaged 4.1% over the 12 months ended Oct. 1, while blue-collar workers received average increases of 2.5%, the bureau said. According to a survey of 4,200 businesses released earlier this month by the National Assn. of Manufacturers, employers anticipate wage increases averaging 5% over the next year.