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Economy in Brief

U.S. Employment Cost Index Rose Slightly Q/Q But Reaches A New Low Y/Y
by Tom Moeller October 30, 2009

Employment compensation picked up slightly last quarter, but high unemployment dragged down the y/y change to its lowest on record. (The series dates back to 1980). The total employment cost index for private industry workers rose 0.5% during 3Q following gains of 0.2% during the prior two quarters. The latest rise about matched Consensus expectations.

Improved wage and salary growth provided most of the "oomph" to last quarter's gain with a 0.5% rise. However, here again, the y/y gain of 1.3% was a new record low. In the factory sector wages rose just 1.2% y/y but in the education & health care sectors wages rose a still-modest 1.8%. In the goods producing sector wage growth fell to just 1.2% and in education & health services they rose 1.8%.

Total benefit costs in private sector increased just 0.3% and the 1.0% y/y gain was a record low. What y/y strength there was was led by a 2.3% gain in production, transportation & materials handling industries and a 1.6% rise in services occupations. The cost of health benefits showed a stable 4.7% rise in the latest 12 months.  The employment cost index figures are available in Haver's USECON database.

Financial Intermediaries and Monetary Economics from the Federal Reserve Bank of New York can be found here. 

ECI - Private Industry Workers (%) 3Q '09 2Q '09 1Q '09 3Q Y/Y 2008 2007 2006
Compensation 0.5 0.2 0.2 1.3 2.8 3.1 2.9
  Wages & Salaries 0.5 0.2 0.2 1.3 3.0 3.4  2.9
  Benefit Costs 0.3 0.2 0.2 1.0 2.6 2.4 2.9
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