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Economy in Brief

U.S. Employment Cost Index Shows Steady Gain
by Carol Stone, CBE  July 29, 2016

The employment cost index for civilian workers increased 0.6% (2.3% y/y) during Q2'16 following a similar Q1 rise. This latest gain was in line with the Action Economics Forecast Survey. Wages and salaries also increased 0.6% (2.5% y/y) after a 0.7% rise, and benefits rose 0.5% (2.0% y/y), the same their Q1 gain.

The employment cost index for private industry workers also went up 0.6% in Q2'16 (2.4% y/y), the same as in Q1. Among industries, the index for manufacturing workers rose 0.5% (2.3% y/y), a bit easier than the 0.6% in Q1. Construction worker compensation also slowed, to 0.5% in Q2 (2.5% y/y) from 0.8% in Q1. Service industries were somewhat mixed, with trade, transportation and utilities up 1.2% in Q2 (3.0% y/y) from 0.7% in Q1, and information up 0.7% (1.8% y/y) from 0.1%. But compensation of finance industry workers gained only 0.2% in Q2 (1.9% y/y), down from 0.7% in Q1. Education and health sector workers pay was up 0.4% (1.9% y/y) in Q2 versus 0.6% the quarter before. Leisure and hospitality sector workers saw their compensation rise 1.1% (2.6% y/y), just a bit more than the 1.0% in Q1. In the public sector, compensation of state and local government workers was up 0.5% (2.3% y/y), the same as in Q1.

Wages and salaries in private industry rose 0.6% (2.5% y/y) in Q2 following a 0.7% increase the quarter before. Factory sector wages were also up 0.6% (2.5% y/y) and 0.7% in Q1, and the gain in the construction sector was 0.5% (2.7% y/y), down from 0.8% in Q1. Wage gains in service industries generally improved in Q2, with trade, transportation and utilities up 1.0% (2.9% y/y) from 0.8% in Q1, and the information sector up 1.2% (2.7% y/y) from 0.5%. Professional and business service wages and salaries gained 0.9% (3.0% y/y), up from 0.4% in Q1. As with total compensation, the finance sector saw a slowdown, to 0.3% (2.2% y/y) from 0.9% in Q1. Leisure and hospitality wages were firm at 1.1% (2.9% y/y, the same as in Q1. State and local government workers' wage gains were steady at 0.4% (1.7% y/y).

Benefits for private industry workers grew 0.4% (1.7% y/y) in Q2, following a 0.5% increase in Q1. The rise in manufacturing was steady at 0.4% (1.8% y/y), and the construction, natural resources and maintenance occupations saw a 0.3% (1.6% y/y) benefit increase, up slightly from 0.2% in Q1. Private service industry benefits overall firmed in Q2 to a 0.6% advance (1.8% y/y) from 0.3% in Q1. In the public sector, state and local government worker benefits again increased 0.6% (3.4% y/y), the same as in Q1.

The employment cost index figures are available in Haver's USECON database. Consensus estimates come from the Action Economics survey, carried in Haver's AS1REPNA database.

Civilian Workers (%) Q2'16 Q1'16 Q4'15 Q2 Y/Y 2015 2014 2013
Compensation 0.6 0.6 0.5 2.3 2.1 2.1 1.9
 Wages & Salaries 0.6 0.7 0.5 2.5 2.2 1.9 1.7
 Benefit Costs 0.5 0.5 0.6 2.0 2.0 2.5 2.3
Private Industry Workers (%)            
Compensation 0.6 0.6 0.5 2.4 2.1 2.1 1.9
 Wages & Salaries 0.6 0.7 0.6 2.6 2.3 2.0 1.9
 Benefit Costs 0.4 0.5 0.4 1.7 1.6 2.3 1.9
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