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Economy in Brief

Employment Cost Index Eased
by Tom Moeller April 28, 2006

The employment cost index for private industry workers rose a moderate 0.6% last quarter after a downwardly revised 0.7% increase to close out 2005. Downward revisions to earlier quarters (mostly in benefit costs) resulted in a picture of sharp deceleration in compensation costs during the last two years. Consensus expectations had been for a 0.9% 1Q increase.

The 2.6% increase in the ECI during the last twelve months was the slowest in ten years.

The 0.4% 1Q increase in benefit costs halved the prior quarter's growth rate and continued a downtrend that since early 2004 has pulled the y/y growth rate to 2.9% from 7.2%. (Annual growth during 2004 was revised to 6.6% from 10.1% reported earlier.)

Wage and salary growth was up slightly to 0.7% from 0.6% averaged during 2005. Service producing industries saw a 0.8% (2.4% y/y) gain while factory sector wages grew 0.5% (NSA, 2.5% y/y).

The latest release encompassed several revisions. To review the latest changes visit BLS site.

ECI- Private Industry Workers 1Q '06 4Q '05 Y/Y 2005 2004 2003
Compensation 0.6% 0.7% 2.6% 3.0% 3.7% 4.0%
  Wages & Salaries 0.7% 0.6% 2.5% 2.5% 2.7% 3.0%
  Benefit Costs 0.4% 0.7% 2.9% 4.0% 6.6% 6.5%
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