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Economy in Brief

U.S. Employment Cost Index Gain Accelerates With Greater Benefits
by Tom Moeller  July 29, 2011

The employment cost index for private industry workers rose 0.8% in Q2 for total compensation versus an unrevised 0.5% Q1 rise. The Q2 increase beat expectations for a 0.5% rise as tallied by Bloomberg. The four-quarter gain of 2.3% was its highest since Q4'08.

Benefit costs increased 1.6% and the four-quarter gain rose to 4.0%. Yearly improvement amongst industry groups was widespread including a 6.1% y/y gain for factory workers and 3.6% for those in service occupations. Management, professional and related workers saw a 3.9% gain, the strongest since 2005. State & local government workers realized a slightly reduced 2.9% y/y increase.

Private sector wages & salaries grew a slightly greater 0.5% (1.7% y/y) after four straight quarters of 0.4% increase. Amongst occupational groups, wages in information grew 1.8% y/y. Management and professional workers posted a steady 1.7% y/y increase and those of sales & office workers saw a constant 1.8% gain. In the factory sector wages rose an improved 1.9% but in education & heath they decelerated to 1.4%. In the government sector, state & local workers saw wage growth fall to a record low 1.1% y/y, down from the 2007 high of 3.8%.

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

Measuring Inflation: The Core Is Rotten from the Federal Reserve Bank of St. Louis can be found here.

ECI - Private Industry Workers (%) Q2'11 Q1'11 Q4'10 Q2 Y/Y 2010 2009 2008
Compensation 0.8 0.5 0.5 2.3 1.9 1.4 2.9
 Wages & Salaries 0.5 0.4 0.4 1.7 1.6 1.6 3.0
 Benefit Costs 1.6 1.2 0.5 4.0 2.6 1.2 2.5
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