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MNI BRIEF: US 2Q Labor Costs Rise 1.0%, Below Expectations


The Employment Cost Index, the broadest measure of U.S. labor costs, rose at the slowest pace in two years at 1.0% in the second quarter after gaining 1.2% in the January through March period, the Labor Department said on Friday. Wall Street had expected the ECI to rise 1.1%. The 12-month rate fell to 4.5% from 4.8% in the previous quarter.

The ECI is widely viewed by Federal Reserve officials and economists as one of the best measures of overall wage growth and an important input into core inflation. Fed Chair Jerome Powell and his colleagues have said they're looking for a deceleration in the ECI and are for nominal wage growth to cool to around 3.25% to 3.5%. The latest figures provide some relief that things are moving in the right direction. (See: MNI INTERVIEW: Powell Opens Door To End Of Fed Hikes-Weinberg)

Wages and salaries increased 1.0% in the second quarter, down from 1.2% in the prior quarter, and eased four tenths to 4.6% year-on-year. Private sector compensation rose 1.0%, from 1.2% in the prior quarter. Private industry wages rose 4.6% year-on-year after, down from 5.1%. For all workers excluding incentive-paid occupations the growth rate over the year slipped to 4.7% from 4.8% the previous quarter.

MNI Washington Bureau | +1 202-371-2121 |
MNI Washington Bureau | +1 202-371-2121 |

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