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Economy in Brief

U.S. Employment Costs Advance 5.1% Over a Year Ago
by Carol Stone, CBE  July 29, 2022

• Wage & salaries are somewhat stronger in Q2.

• Benefits moderate in Q2 after Q1 surge.

The employment cost index (ECI) for civilian workers increased 1.3% in 2Q’22 after rising 1.4% in 1Q'22. This latest quarterly move produced 5.1% growth in employment costs over a year ago. This is the largest year/year advance since 3Q’1990. The Action Economics Forecast Survey expected a 1.2% quarterly gain.

Wages & salaries advanced 1.4% in Q2 (5.3% y/y), up from 1.2% in Q1. Benefits growth slowed to 1.2% in Q2 (4.8% y/y), but they had surged by 1.8% in Q1.

Private-sector compensation picked up to a 1.5% advance in Q2 (5.5% y/y) following 1.4% (4.8% y/y) in Q1. Wages & salaries in the private sector were up 1.6% in Q2, yielding an advance of 5.7% over a year ago. This followed a 1.3% quarterly rise in Q1. Benefit costs moderated somewhat in Q2, increasing 1.3% (5.3% y/y) following their 1.9% surge in Q1.

Compensation in goods-producing industries slowed somewhat in Q2, rising 1.2% (4.7% y/y) after 1.5% in Q1. Compensation in service-providing industries repeated its 1.4% Q1 advance in Q2 and that yielded a 5.2% rise over Q2’2021.

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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