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Economy in Brief

U.S. Employment Cost Index Strengthens
by Tom Moeller  October 31, 2017

The employment cost index for civilian workers rose 0.7% (2.5% y/y) during Q3'17, up from a 0.5% increase in Q2'17. A 0.6% rise had been expected in the Action Economics Survey. Wages and salaries also increased 0.7% (2.5% y/y) after a 0.5% rise. Benefits were up 0.8% (2.5% y/y) following a 0.6% gain.

The employment cost index increase for private industry workers also accelerated to 0.8% (2.6% y/y) following a 0.5% gain. That matched the strongest quarterly increase since Q4'07. Amongst industries, manufacturing compensation strengthened 1.0% (2.6% y/y) after a 0.6% rise and construction compensation increased 0.5% (2.7% y/y) after a 0.4% gain. In service-providing industries, compensation increased 0.7% (2.5% y/y) following a 0.6% rise. Professional & business services compensation jumped 1.1% (2.7% y/y), the strongest increase since early 2015. Trade, transportation & utilities compensation rose 0.9% (2.9% y/y), the strongest increase since early last year. Information compensation rose 0.7% (2.6% y/y) on the heels of a 1.1% rise. Financial activities compensation moderated to 0.5% (2.4% y/y) after a 0.7% gain. Leisure & hospitality compensation moderated to 0.3% (3.4% y/y) as did education & health services compensation (1.9% y/y), both the weakest in two years. State & local government workers realized 0.6% compensation growth (2.4% y/y) after a 0.5% gain.

Wages & salaries for private industry workers increased 0.7% (2.6% y/y). Goods-producing wages increased 0.7% (2.6% y/y) as factory sector wages jumped 0.8% (2.5% y/y), the strongest increase since Q2'08. Construction wages advanced a firm 0.6% and jumped 3.0% y/y. In the service sector, wages rose 0.7% (2.6% y/y) after a 0.8% increase. Financial activity wages rose a moderated 0.5% (2.2% y/y) and information sector wages grew 0.7% (2.3% y/y). Professional & business service wages strengthened 1.2% (2.7% y/y), the firmest rise in two years. Leisure & hospitality wages advanced 0.4%. The 3.6% y/y gain was the best annual increase since its low of 0.7% in 2011. Education & health services wages grew a diminished 0.2% (2.1% y/y). Trade, transportation and utilities wages improved 0.8% (3.2% y/y). State & local government wages advanced 0.5% (2.0% y/y).

Benefits for private industry workers increased an accelerated 0.7% (2.4% y/y), the strongest increase since Q2'14. Factory sector benefits surged 1.7% (2.9% y/y), three times the recent rates of growth. Production & transportation workers benefit value strengthened 1.2% (2.8% y/y) while service-producing workers realized a steady 0.6% rise (2.3% y/y). Management & professional workers realized a moderated 0.5% gain (2.5% y/y) while sales & office workers saw steady 0.7% quarterly growth (2.0% y/y). State & local government workers benefits increased a fairly steady 0.8% (3.0% y/y).

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

Civilian Workers (%) Q3'17 Q2'17 Q1'17 Q3'17 Y/Y 2016 2015 2014
Compensation 0.7 0.5 0.8 2.5 2.2 2.1 2.1
 Wages & Salaries 0.7 0.5 0.8 2.5 2.3 2.2 1.9
 Benefit Costs 0.8 0.6 0.7 2.5 2.1 1.9 2.5
Private Industry Workers (%)      
Compensation 0.8 0.5 0.8 2.6 2.1 2.1 2.1
 Wages & Salaries 0.7 0.5 0.9 2.6 2.4 2.3 2.0
 Benefit Costs 0.7 0.6 0.6 2.4 1.6 1.6 2.3
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