U.S. Employment Cost Index Gain Moderates in Q2
by:Tom Moeller
|in:Economy in Brief
Summary
- Y/Y increase falls sharply.
- Wage & benefit growth both slip.
- Both goods-producing & service-sector compensation growth slows.
The employment cost index (ECI) for civilian workers rose 0.9% during Q2’24 following a 1.2% Q1 increase, according to the Bureau of Labor Statistics. The latest quarterly increase matches Q4 2023 as the slowest in three years. It was below the quarterly high of 1.4% in Q1’22. A 1.0% gain had been expected in the Action Economics Forecast Survey. During the last year, the 4.1% increase is the weakest since 2021.
Wages and salaries for civilian workers rose 0.9% (4.2% y/y) in Q2 following three consecutive 1.1% increases. The increase was more than double its 0.4% low in mid-2020. Benefits rose 1.0% (3.8% y/y) after a 1.1% gain. These were more than double the Q2’21 low of 0.4%, but were below the high of 1.6% in Q1’22.
Private industry workers’ compensation rose 0.9% (3.9% y/y) in Q2 following a 1.1% increase. Wages and salaries for private industry workers increased 0.8% last quarter after rising 1.1% in Q1. The 4.0% y/y increase was below the 5.6% high in Q2’22. Benefits for private industry workers rose 0.8% (3.4% y/y) in Q2 after a 1.0% increase. Year-over-year, benefits were up 3.4% in Q2 and the gain has been trending lower since a 5.1% rise in Q2‘22.
By industry sector, total compensation in goods-producing industries rose 0.5% (3.5% y/y) in Q2’24 after strengthening roughly 1.0% in each quarter for the last three years. In service-producing industries, total compensation increased 1.0% after rising 1.2% in Q1. The 4.1% y/y gain stood below a 5.2% y/y high which occurred throughout most of 2022. Increases during the last year were strongest in transportation & warehousing (7.7% y/y) and education (4.6% y/y).
The employment cost index measures the change in the cost of labor, free from the influence of employment shifts across occupations and industries. It is provided by the Bureau of Labor Statistics and is available in Haver’s USECON database. Consensus estimates from the Action Economics Forecast Survey are in Haver’s AS1REPNA database.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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