· Rising 0.8% last quarter, the employment cost index for private industry workers remained about steady with the 4Q '07 increase. The gain matched Consensus expectations. In addition, the gain in total compensation in 1Q was roughly steady at 3.2% with the gains since 2005.

· During the last twenty years there has been a 54% correlation between the growth in employee compensation and the rise in the PCE price index. That level of correlation goes neither up or down, when either series is led or lagged the other. This suggests  a self reinforcing effect between the two series.  

· Wage and salary growth held steady at 0.8%. Wages account for roughly 70% of the compensation index. Wages in the services industries rose 0.7% (3.2% y/y). Wages in the goods producing industries rose at an accelerated 1.0% (3.2% y/y).

· The rise in benefit costs eased to 0.6% after a 0.8% 4Q rise. The rise in benefit costs in the service producing industries slipped to 0.6% (3.3% y/y) but in the goods producing sector benefits rose 0.8% (3.1% y/y). That is double the recent rates of growth. 

ECI- Private Industry Workers

1Q '08

4Q '07

3Q '07

1Q Y/Y

2007

2006

2005

Compensation

0.8%

0.9%

0.8%

3.2%

3.1%

2.9%

3.1%

  Wages & Salaries

0.8%

0.8%

0.8%

3.2%

3.4%

2.9%

2.5%

  Benefit Costs

0.6%

0.8%

0.8%

3.2%

2.4%

2.9%

4.6%