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Economy in Brief

U.S. Employment Cost Index Gains Moderate As Benefits Ease
by Tom Moeller July 30, 2010

The employment cost index for private industry workers gave back some its recent improvement with a 0.5% gain last quarter. Nevertheless, the increase remained improved from the 0.2% low early last year. (The series dates back to 1980). The increase matched Consensus expectations for a 0.5% gain.

Growth in benefit costs in the private sector slowed to 0.5% during 2Q following the strong 1.4% 1Q pop. The quarterly pullback included sales and office workers (2.8% y/y), production & material handling employees (3.7% y/y) and management & professional workers (1.5% y/y). The cost of health benefits rose further to 5.0% in the latest 12 months, up from the 3.5% low in 2008.

Growth in wages & salaries held steady at 0.4%. Management, professional & related worker wages held steady (1.6% y/y) while sales & office worker wages improved to 4% (2.1% y/y). Production & material handling worker wages gained an improved 0.4% (1.4% y/y) but was still near the least on record. Factory sector wages grew 0.5% (1.5% y/y) while workers in service occupation saw a rise of 0.5% (1.7% y/y).

The employment cost index figures are available in Haver's USECON database.

ECI - Private Industry Workers (%) Q2 '10 Q1 '10 Q4 '09 Q2 Y/Y 2009 2008 2007
Compensation 0.5 0.6 0.4 1.8 1.5 2.8 3.1
  Wages & Salaries 0.4 0.4 0.5 1.6 1.5 3.0 3.4
  Benefit Costs 0.5 1.4 0.3 2.5 1.2 2.6 2.4
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