The Employment Cost Index, the broadest measure of U.S. labor costs, rose 1.4% last quarter after gaining 1.0% in the October-December period, the Labor Department said on Friday, above expectations and supporting views that inflation could persist at higher levels.
The year-on-year rate increased to 4.5% from 4.0% in the previous quarter. Wages and salaries rose 1.2% after shooting up 1.0% in the fourth quarter, and were up 4.7% year-on-year. Benefits gained 1.8% after rising 0.9% in the prior quarter, and were up 4.1% over the 12-month period.
Fed Chair Jerome Powell cited the ECI in particular in December last year when explaining the central bank's decision to cut short previous plans to slim down its asset purchases and bring forward interest rates hikes. Ex-Fed staff have previously told MNI the central bank may need to lean against the unemployment rate to contain the overheated labor market.
Source: US BLS