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Economy in Brief

U.S. Employment Cost Index Has Stronger Gain
by Carol Stone, CBE  April 28, 2017

Lifted by outsized rises in several industries, the employment cost index for civilian workers rose 0.8% (2.4% y/y) during Q1'17, compared to just 0.5% in Q4'16. A 0.6% rise had been expected in the Action Economics Forecast Survey. Wages and salaries also increased 0.8% (2.5% y/y) after a 0.5% rise, and benefits were up 0.7% (2.2% y/y) following a 0.5% gain.

The employment cost index for private industry workers also rose 0.8% (2.3% y/y) following a 0.5% gain. Among industries, the biggest increase came in leisure & hospitality, 1.9% in the quarter (4.3% y/y) after 0.6% the previous period; there were 1.0% quarterly gains in construction (2.5% y/y) after 0.7%, and in trade, transportation & utilities (2.7% y/y), which followed 0.5% in Q4. Professional & business services had a 0.9% (1.6% y/y) increase after just 0.2% in Q4. Manufacturing sector compensation rose 0.5% (2.1% y/y), the same as in Q4; with a like pattern for private sector education & health workers. The industries where worker compensation slowed were information, 0.3% (1.7% y/y), down from 0.5%, and finance, just 0.2% (2.9% y/y) after 0.6%. In the public sector, compensation of state and local government workers rose 0.6% (2.6% y/y), the same as in Q4.

Wages and salaries in private industry rose 0.9% (2.6% y/y). The pattern of strength and weakness among industries was very similar to total compensation; leisure & hospitality wages advanced 1.6% (4.6% y/y), trade, transportation & utilities were up 1.5% (3.1% y/y) and construction sector wages gained 1.1% (2.7% y/y). Professional & business services workers saw a 0.7% raise (1.4% y/y), while manufacturing and education & health both had 0.6% increases (manufacturing 2.6% y/y and education & health, 2.2% y/y). Wages were flat in the information sector (2.0% y/y), and they actually went down 0.2% in finance (2.8% y/y). State and local government workers' wages increased 0.6% (2.2% y/y).

Benefits for private industry workers picked up a bit in Q1'17, growing 0.6% (1.9% y/y) after Q4's 0.4%. The rise in manufacturing workers' benefits increased 0.5% (1.5% y/y) after just 0.2% in Q4. Private service industry benefits firmed noticeably, by 0.8% (2.0% y/y) following just 0.3%. In the public sector, state and local government worker benefits were up 0.8% (3.2% y/y) after Q4's 0.7% increase.

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 (%) Q1'17 Q4'16 Q3'16 Q1 Y/Y 2016 2015 2014
Compensation 0.8 0.5 0.6 2.4 2.2 2.1 2.1
 Wages & Salaries 0.8 0.5 0.5 2.5 2.3 2.2 1.9
 Benefit Costs 0.7 0.5 0.6 2.2 2.1 1.9 2.5
Private Industry Workers (%)      
Compensation 0.8 0.5 0.5 2.3 2.1 2.1 2.1
 Wages & Salaries 0.9 0.5 0.5 2.6 2.4 2.3 2.0
 Benefit Costs 0.6 0.4 0.5 1.9 1.6 1.6 2.3
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