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Economy in Brief

Employment Cost Index Eased With Benefit Costs
by Tom Moeller April 29, 2005

The employment cost index for private industry workers rose 0.6% last quarter and the rise was quite a bit more moderate than Consensus expectations for a 1.0% increase. Earlier figures were slightly revised.

Moderation came as benefit costs rose the least in three years. The 1.1% gain reflected a 0.4% (+6.3% y/y) rise in the manufacturing sector which compared to quarterly gains between 2 and 4% during the prior three years. The y/y rise in the cost of health benefits rose to 7.5% versus 7.3% growth in 2004 and a 10.5% rise during 2003.

Wage and salary growth picked up to 0.6% from 0.4% in 4Q04 but y/y growth is down by one-third from the peak in early 2002. Wages account for roughly 70% of the compensation index.

ECI- Private Industry Workers 1Q '05 4Q '04 Y/Y 2004 2003 2002
Compensation 0.6% 0.8% 3.4% 3.8% 4.0% 3.2%
  Wages & Salaries 0.6% 0.4% 2.4% 2.4% 3.0% 2.7%
  Benefit Costs 1.1% 1.6% 5.8% 6.9% 6.4% 4.7%
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