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Economy in Brief

U.S. Employment Cost Index Increases Steadily
by Tom Moeller  April 30, 2019

The employment cost index (ECI) for civilian workers rose 0.7% in Q1'19 following a 0.7% Q4'18 gain. The riser matched expectations in the Action Economics Forecast Survey. The increase left y/y compensation growth at 2.9%, up from its low of 1.7% y/y ten years ago. Civilian workers include those in private industry and state & local government, but not federal government employees.

Wage and salaries rose 0.7% (2.8% y/y) following a 0.6% rise while benefits for civilian workers improved a steady 0.7% (2.7% y/y).

Employment cost gains in private industry improved to 0.7% last quarter after a 0.7% Q4 rise. Here again, however, the y/y rise of 2.7% was nearly the strongest growth in ten years. Compensation in goods producing industries rose an accelerated 0.8% (2.4% y/y) following a 0.6% rise. Factory sector compensation improved 0.9% (2.3% y/y) and earnings in the construction sector of 0.8% (2.8% y/y) compared to 0.6% in Q4. Compensation within the service sector increased 0.6% (2.8% y/y) as earnings in the leisure & hospitality sector rose a lessened 0.4%. The 3.3% y/y gain was increased from a low of 0.8% in early 2013. Education & health care compensation gained 0.4%, and the 2.5% y/y increase also was near a ten-year high. Professional & business services compensation improved 0.3% (2.3% y/y) after a 0.6% rise. Trade, transportation & utilities compensation rose a firmer 0.8% (3.2% y/y). Financial services compensation jumped 0.9% (2.7% y/y) after a 0.7% gain. Information sector earnings rose an accelerated 0.9% and 2.7% y/y. Sate & local government workers compensation improved 0.7%, and the 3.0% y/y gain increased from 1.6% in 2011. It as the strongest rate of gain since 2009.

Wage & salary gains within private industry held steady q/q at 0.7%, and the 3.0% y/y increase was improved from 1.6% averaged from 2009 to 2012. Goods-producing industry wages & salaries rose a steady 0.8%, but y/y growth accelerated to 2.9%. Factory sector wages & salaries rose a stronger 0.9% (2.9% y/y), matching the quickest quarterly increase since 2006. Construction wages & salaries rose a steady 0.7% (2.9% y/y). Service-producing industry wages & salaries increased a steady 0.7% (3.0% y/y). Annual wage & salary growth in leisure & hospitality backed off to 3.9%, but remained up from a low of 0.7% in 2011. In education & health services, wages & salaries rose 0.4% and a lessened 2.7% y/y. Professional & business services wages & salaries improved 0.4% and a lessened 2.6% y/y, and trade, transportation & utilities wages & salaries surged 1.0% (3.5% y/y). State & local government workers wages & salaries rose 0.6% and an accelerated 2.5% y/y, up from 0.9% in 2011.

Private industry benefits rose a steady 0.5%, but the y/y gain eased to 2.4% as service-producing benefits rose 0.4% q/q and 2.6% y/y, up from 1.0% y/y in 2015. Sales & office worker benefits improved a greatly lessened 0.3% (2.9% y/y). Goods-producing benefits surged 0.9% (1.4% y/). Factory sector benefits jumped 0.9% after a 0.3% rise, but the y/y increase remained depressed at 1.0%. State & local government worker benefits strengthened a steady 1.0% q/q. The y/y increase of 3.7% was up from 2.1% in Q4'11.

The employment cost index figures are available in Haver's USECON database. Consensus estimates come from the Action Economics survey in Haver's AS1REPNA database. This quarter's release included annual seasonal adjustment revisions affecting the last five years.

Civilian Workers (% chg) Q1'19 Q4'18 Q3'18 Q1'19 Y/Y 2018 2017 2016
Compensation 0.7 0.7 0.8 2.9 2.8 2.5 2.2
 Wages & Salaries 0.7 0.6 0.9 2.8 2.9 2.5 2.3
 Benefit Costs 0.7 0.7 0.4 2.7 2.7 2.4 2.0
Private Industry Workers (% chg)    
Compensation 0.7 0.7 0.8 2.7 2.9 2.5 2.1
 Wages & Salaries 0.8 0.7 0.8 3.0 3.0 2.6 2.4
 Benefit Costs 0.5 0.5 0.4 2.3 2.6 2.2 1.6
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