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Economy in Brief

U.S. Employment Cost Index Decelerates
by Tom Moeller  July 28, 2017

The employment cost index for civilian workers rose 0.5% (2.4% y/y) during Q2'17, down from a 0.8% increase in Q1'17. A 0.6% rise had been expected in the Action Economics Forecast Survey. Wages and salaries also increased 0.5% (2.3% y/y) after a 0.8% rise. Benefits were up 0.6% (2.4% y/y) following a 0.7% gain.

The employment cost index increase for private industry workers also decelerated to 0.5% (2.3% y/y) following a 0.8% gain. Amongst industries, manufacturing compensation improved 0.6% (2.1% y/y) after a 0.5% rise and construction compensation increased 0.4% (2.2% y/y) after a 1.0% gain. In service-providing industries, compensation rose 0.6% (2.4% y/y) following a 0.8% rise. Information compensation rose 1.1% (2.7% y/y) on the heels of a 0.3% rise. Financial activities compensation rose 1.0% (3.1% y/y) after a 0.2% gain. Professional & business services compensation improved 0.6% (1.8% y/y) after a 0.9% rise and leisure & hospitality compensation gained 0.5% (3.9% y/y) after a 1.9% strengthening. Education & health services compensation improved 0.5% (2.1% y/y), the same as during Q1. Trade, transportation & utilities compensation rose 0.4% (2.4% y/y) after a 1.0% gain. State & local government workers realized 0.5% compensation growth (2.6% y/y) after a 0.6% gain.

Wages & salaries for private industry workers increased 0.5% (2.4% y/y). Goods producing wages increased 0.5% (2.4% y/y) as factory sector wages rose 0.5% (2.3% y/y). Construction wages advanced 0.4% (2.3% y/y). In the service sector, wages rose 0.6% (2.5% y/y). Financial activity wages jumped 1.1% (2.9% y/y) and information sector wages grew 1.0% (2.5% y/y). Professional & business service wages improved 0.5% (1.6% y/y) and leisure & hospitality wages advanced 0.6% (4.1% y/y). Education & health services wages grew a steady 0.6% (2.2% y/y). Trade, transportation and utilities wages improved 0.3% (2.6% y/y). State & local government wages advanced 0.4% (2.1% y/y).

Benefits for private industry workers increased a steady 0.6% (2.1% y/y). Factory sector benefits improved a constant 0.5% (1.6% y/y). Management & professional workers realized a very much improved 0.8% gain (2.3% y/y) while sales & office workers saw 0.7% growth (2.0% y/y), the quickest rise since Q1'16. Production & transportation workers benefit value gained a steady 0.5% (2.2% y/y) while service producing workers realized a diminished 0.4% rise (2.1% y/y), the weakest increase in two years. State & local government workers benefits increased a fairly steady 0.7% (3.2% y/y).

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 (%) Q2'17 Q1'17 Q4'16 Q2'17 Y/Y 2016 2015 2014
Compensation 0.5 0.8 0.5 2.4 2.2 2.1 2.1
 Wages & Salaries 0.5 0.8 0.5 2.3 2.3 2.2 1.9
 Benefit Costs 0.6 0.7 0.5 2.4 2.1 1.9 2.5
Private Industry Workers (%)      
Compensation 0.5 0.8 0.5 2.3 2.1 2.1 2.1
 Wages & Salaries 0.5 0.9 0.5 2.6 2.4 2.3 2.0
 Benefit Costs 0.6 0.6 0.4 2.1 1.6 1.6 2.3
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