|Employment Cost Index
The employment cost index continues to signal elevated price pressures for labor, up 0.8 percent in the third-quarter for a year-on-year rate of 2.8 percent. The quarterly rate is the highest of the expansion, matched twice before in the first quarter this year and the first quarter last year, while the yearly rate is also an expansion high, matched once in the second-quarter of this year.
Among components, the cost of wages & salaries rose a quarterly 0.9 percent which is also an expansion high and the second such reading in three quarters. This yearly rate is up 1 tenth at 2.9 percent in what is a new expansion high. In contrast, however, benefit costs moderated and sharply, up only 0.4 percent in the quarter vs 0.9 percent in the second quarter and down 3 tenths on the year to 2.6 percent.
The slowing in benefit costs is a plus in today’s report and that helps offset the acceleration in wages. This report probably won’t turn up the heat for accelerated rate hikes from the Federal Reserve which watches this report with special focus.
Increasing pressure is expected for the employment cost index with Econoday’s consensus at a 0.7 percent rise in the third quarter compared to 0.6 percent in the second quarter. The year-on-year rate in the second quarter, at 2.8 percent, was the highest in 10 years in what was a strong signal of wage pressures in the labor market.