Global| Jan 31 2002Employment Cost Index Gains Capped by Higher Unemployment
by:Tom Moeller
|in:Economy in Brief
Summary
The employment cost index rose as expected last quarter. The quarterly report was virtually identical in substance to the 3Q report: higher unemployment rates have constrained growth in wages and benefits although increases in benefit [...]
The employment cost index rose as expected last quarter. The quarterly report was virtually identical in substance to the 3Q report: higher unemployment rates have constrained growth in wages and benefits although increases in benefit costs remain elevated.
Compensation gains in service sector occupations have steadily accelerated since 1999 while gains in blue collar compensation have slowed over the last year.
Growth in ECI compensation and average hourly earnings have converged.
| ECI- Private Industry Workers | 4Q`01 | 3Q `01 | Y/Y | 2001 | 2000 | 1999 |
|---|---|---|---|---|---|---|
| Compensation | 1.0% | 0.9% | 4.2% | 4.1% | 4.4% | 3.5% |
| Wages & Salaries | 0.9% | 0.7% | 3.8% | 3.7% | 3.9% | 3.5% |
| Benefit Costs | 1.3% | 1.4% | 5.1% | 5.1% | 5.7% | 3.5% |
by Tom Moeller January 31, 2002
Personal income rose for the first time since August and by slightly more than expected.
A 0.6% gain in wage & salary disbursements led the rise in income, though it too was the first material gain since the summer.
Personal spending fell for the third month in four again reflecting lower sales of light vehicles. Nondurable PCE also fell for the third month in four and services spending rose moderately
Disposable income rose a modest 0.3%. The annual gain of 3.1% has more than halved since last year. Gains in real DPI also have halved to 2.0%
The PCE price deflator fell for the third month in four. The price deflator less food and energy was unchanged (1.6% y/y).
| Disposition of Personal Income | Dec '01 | Nov '01 | Y/Y | 2001 | 2000 | 1999 |
|---|---|---|---|---|---|---|
| Personal Income | 0.4% | -0.0% | 2.7% | 4.9% | 7.0% | 4.7% |
| Personal Consumption | -0.2% | -0.3% | 3.6% | 4.9% | 7.7% | 6.7% |
| Savings Rate | 1.0% | 0.5% | 1.2% | 1.6% | 1.0% | 2.4% |
| PCE Price Deflator | -0.2% | -0.1% | 1.1% | 1.9% | 2.7% | 1.6% |
by Tom Moeller January 31, 2002
Initial claims for unemployment insurance rose a bit more than expected in the latest week. The prior week's level was revised down.
Despite the rise in weekly claims, the four-week moving average fell to 386,000, its lowest level since mid-August.
Continuing claims for unemployment insurance rose slightly in the latest week, but the prior week's level was revised to show a 4.7% drop versus the 1.5% decline reported initially.
The insured rate of unemployment was unchanged at 2.6%. The prior week's level was revised down.
| Unemployment Insurance (000s) | 01/26/02 | 01/19/02 | Y/Y | 2001 | 2000 | 1999 |
|---|---|---|---|---|---|---|
| Initial Claims | 390.0 | 360.0 | 11.4% | 408.0 | 302.8 | 297.7 |
| Continuing Claims | -- | 3,382 | 44.1% | 3,031 | 2,127 | 2,187 |
by Tom Moeller January 31, 2002
The Chicago Purchasing Manager’s Index of Business activity jumped as expected. The historical seasonally adjusted data was recently revised.
Indexes of new orders and production rose sharply, but employment fell to a record low.
The prices paid index fell and the index of vendor delivery speed rose only slightly, both indicating little inflationary pressure.
| Chicago Purchasing Managers Index, SA | Jan '02 | Dec '01 | Y/Y | 2001 | 2000 | 1999 |
|---|---|---|---|---|---|---|
| Business Barometer | 45.1 | 41.5 | 41.7 | 41.4 | 51.8 | 56.5 |
| Prices Paid | 40.7 | 47.0 | 62.6 | 50.6 | 65.6 | 57.5 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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