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Economy in Brief

U.S. Employment Costs Accelerate in Q1'22
by Tom Moeller  May 2, 2022

• Wage and salaries improve.

• Benefits skyrocket.

The employment cost index (ECI) for civilian workers increased 1.4% in Q1'22 after rising 1.0% in 4Q'21. The 4.5% y/y increase has almost doubled since the end of 2020. The Action Economics Forecast Survey expected a 1.1% quarterly gain.

The overall increase was driven by robust gains in both wages & salaries as well as benefits. Wage & salary costs rose 1.2% (4.7% y/y) in Q1 following a 1.0% gain. Benefits surged 1.8% (4.1% y/y) following the 0.9% rise in Q4.

Private-sector compensation increased 1.4% (4.8% y/y) following a 1.1% gain. Wages & salaries in the private-sector rose 1.3% last quarter and 4.8% y/y. That followed a 1.1% quarterly rise in Q4'21 and a 1.6% Q3'21 increase. Benefit costs surged 1.9% (4.1% y/y) following a 0.9% Q4'21 gain. It was the largest quarterly gain since Q1'04.

Compensation in goods-producing industries strengthened 1.5% (4.4% y/y) in Q1 following three straight quarterly increases near 1.0%. Compensation in service-providing industries jumped 1.4% (4.5% y/y) following a 0.9% increase.

The employment cost index measures the change in the cost of labor, free from the influence of employment shifts across occupations and industries. It is provided by the Bureau of Labor Statistics and is available in Haver's USECON database. Consensus estimates from the Action Economics survey are in Haver's AS1REPNA database.

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