MNI BRIEF: US Labor Costs Increase 0.9%, Below Expectations
The Employment Cost Index, the broadest measure of U.S. labor costs, rose 0.9% last quarter, a tenth below expectations and down from 1.2% in the January-March period, the Labor Department said on Wednesday. The year-on-year rate fell to 4.1% from 4.2% in the previous quarter and 4.5% a year ago.
The ECI is widely viewed by policymakers and economists as one of the better measures of labor market slack and a predictor of core inflation. Fed Chair Jerome Powell and his colleagues were looking for a deceleration in the employment cost index and are looking for nominal wages to cool to around 3.5%. The latest figures provide some relief that things are moving in the right direction. (See: MNI INTERVIEW: Worries Over US Jobs Weakness Overdone- Bullard)
Wages and salaries increased 0.9% last quarter, down from 1.1% in the last quarter, and eased two tenths to 4.2% year-on-year. Private sector compensation rose 0.9%, down from 1.1% in the first quarter. Private industry wages rose 4.1% year-on-year after, down from 4.6% a year ago. For all workers excluding incentive-paid occupations the growth rate over the year slipped to 4.1% from 4.2% the previous quarter.