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Economy in Brief

U.S. Employment Cost Index Moderates in Q4
by Carol Stone  January 30, 2015

The employment cost index for private industry workers rose 0.6% (2.1% y/y) in Q4'14, following an unrevised 0.7% Q3 rise. The Q3 number equaled expectations for a 0.6% rise in the Action Economics Forecast Survey. For 2014 as a whole, compensation costs were up 2.1% after 1.9% in 2013.

Wages & salaries of private industry workers also increased 0.6% (2.0% y/y) last quarter after their 0.7% Q3 rise. Most sectors hovered near the overall total: health care was the strongest at 0.8% (1.9% y/y), while construction (1.9% y/y), manufacturing (2.3% y/y), retail trade (2.4% y/y) and finance (1.8% y/y) all had 0.7% rises in the quarter. Information (2.0% y/y) and education (1.7% y/y) were both up 0.6%, with professional and business services up 0.5% (2.5% y/y), utilities 0.4% (2.5% y/y) and transportation 0.3% (2.5% y/y). Overall for 2014, wages and salaries gained 2.0%, the largest gain since 2008.

Benefit costs were up 0.6% (2.6% y/y) after a similar 0.6% Q3 rise. Reported by occupational group, natural resource, construction and maintenance workers had the largest benefit increase, 0.8% (3.5% y/y) with management & professional workers (2.7% y/y), sales and office staff (2.5% y/y) and service occupations (1.0% y/y) all up 0.6% in the quarter. Production and transportation worker benefits rose 0.5% (2.2% y/y). Private industry workers' benefits were up 2.3% for all of 2014, stronger than 1.9% in 2013.

Total compensation for state & local government workers rose 0.6% (2.1% y/y) in Q4 after three quarters with 0.5% each. In Q4, education workers' compensation gained 0.7% (2.0% y/y), health care and social assistance 0.6% (1.5% y/y) and public administration workers, also 0.6% (2.4% y/y). All state and local government worker compensation was up 2.0% for 2014 as a whole, not historically strong, but the firmest since 2009.

The employment cost index figures are available in Haver's USECON database. Consensus estimates come from the Action Economics survey, carried in Haver's AS1REPNA database.

ECI- Private Industry Workers (%) Q4'14 Q3'14 Q2'14 Q4 Y/Y 2014 2013 2012
Compensation 0.6 0.7 0.8 2.3 2.1 1.9 2.0
 Wages & Salaries 0.6 0.7 0.8 2.3 2.0 1.9 1.8
 Benefit Costs 0.6 0.6 1.1 2.6 2.3 1.9 2.2
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