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Economy in Brief

U.S. Employment Cost Index Increases at Steady Rate
by Tom Moeller  October 28, 2016

The employment cost index for civilian workers increased 0.6% (2.2% y/y) during Q3'16 for the third straight quarter. The rise matched expectations in the Action Economics Forecast Survey. Wages and salaries increased 0.5% (2.4% y/y) after a 0.6% rise, and benefits rose 0.7% (2.3% y/y) following a 0.5% gain.

The employment cost index for private industry workers increased 0.5% in (2.2% y/y) following a 0.6% gain. Among industries, the index for manufacturing workers rose a steady 0.6% (2.5% y/y). Construction worker compensation eased 0.1% (+1.9% y/y). Service industries compensation improved 0.6% (2.2% y/y), as it did in Q2. Compensation of finance industry workers surged 1.4% (3.1% y/y), the strongest rise since 2003. Trade, transportation and utilities rose 0.4% (2.4% y/y), and information increased 0.8% (1.9% y/y), up from 0.1%. Professional & business service compensation improved 0.2% (1.7% y/y), while education and health sector workers compensation rose 0.5% (1.9% y/y). Leisure and hospitality sector workers saw their compensation rise 0.5% (1.9% y/y). In the public sector, compensation of state and local government workers strengthened 0.9% (2.7% y/y), the strongest rise since 2008.

Wages and salaries in private industry rose 0.5% (2.4% y/y), the weakest rise since Q2'15. Factory sector wages increased a steady 0.7% (2.8% y/y), but construction sector wages dipped 0.2% (+2.0% y/y). Wage gains in service industries lessened to 0.5% after two quarters of 0.7% increase. Financial activity wages jumped 1.4% (3.4% y/y), the strongest rise since 2007. Trade, transportation and utilities pay improved 0.3% (2.2% y/y) after a 0.8% rise, but information sector wages increased 0.8% (2.9% y/y) after a 0.5% rise. Professional and business service wages and salaries edged 0.1% higher (1.9% y/y), the weakest performance in over a year. Education & health services pay increased 0.4% (2.1% y/y), while leisure and hospitality wages jumped another 1.0% (3.8% y/y), about the same as in the prior two quarters. State and local government workers' wages increased 0.7% (2.1% y/y), the strongest increase since 2008.

Benefits for private industry workers grew 0.5% (1.8% y/y), following a 0.4% increase. The rise in manufacturing was steady at 0.4% (2.1% y/y) for the last three quarters. Private service industry benefits overall firmed 0.6% (1.8% y/y) after a 0.3% rise. In the public sector, state and local government worker benefits strengthened 1.2% (3.7% y/y), double the increases in the prior two quarters.

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 (%) Q3'16 Q2'16 Q1'16 Q3 Y/Y 2015 2014 2013
Compensation 0.6 0.6 0.6 2.2 2.1 2.1 1.9
 Wages & Salaries 0.5 0.6 0.7 2.4 2.2 1.9 1.7
 Benefit Costs 0.7 0.5 0.5 2.3 2.0 2.5 2.3
Private Industry Workers (%)          
Compensation 0.5 0.6 0.6 2.2 2.1 2.1 1.9
 Wages & Salaries 0.5 0.6 0.7 2.4 2.3 2.0 1.9
 Benefit Costs 0.5 0.4 0.5 1.8 1.6 2.3 1.9
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