MNI BRIEF: US Labor Costs Increase 1.0%, Below Expectations
The Employment Cost Index, the broadest measure of U.S. labor costs, rose 1.0% last quarter after gaining 1.2% in the July-September period, the Labor Department said on Tuesday. The year-on-year rate rose to 5.1% from 5.0% in the previous quarter.
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 3.25% to 3.5%. The latest figures provide some relief that things are moving in the right direction and bond yields dipped after the release.
Wages and salaries increased 1.0% last quarter after rising 1.3% in the third quarter and remained at 5.1% year-on-year. Private sector wages rose 1.0%, stepping down from 1.2% in the third quarter. Private industry wages rose 5.1% year-on-year after increasing 5.2% in the third quarter. For all workers excluding incentive-paid occupations the growth rate over the year reached fell to 5.0% from 5.2% the previous quarter.