- Prior quarter was +0.9%
- Employment benefits +0.9% vs +1.0% prior quarter
- Employment wages +0.7% vs +0.9% prior quarter
The US Employment Cost Index (ECI) increased by 0.8% q/q in the third quarter, with both wages and salaries and benefit costs contributing to the increase. Wages and salaries rose 0.7%, while benefit costs increased 0.9% compared with the previous quarter.
On an annual basis, total compensation costs for civilian workers increased by 3.4%, with wages and salaries rising 3.1% and benefit costs accelerating by 3.9%. The figures show that labour cost pressures remain relatively contained, although benefits continue to increase faster than wages.
Looking at private industry, compensation costs also increased by 0.8% q/q and 3.4% y/y. However, inflation-adjusted wages and salaries declined by 0.6% over the year, as nominal wage growth is still failing to keep pace with consumer price increases. The continued gap between nominal and inflation-adjusted wage growth also highlights the pressure households are facing from higher living costs.
For background, the Employment Cost Index (ECI) is a quarterly report from the Bureau of Labor Statistics (BLS) that measures the change in the total cost of labor for businesses. The Fed considers the ECI the “gold standard” for measuring wage inflation because it is more precise and comprehensive, the only drawback is that it’s not as timely as the Average Hourly Earnings data.
This article was written by Giuseppe Dellamotta at investinglive.com.