Global| Jan 30 2009U.S. Employment Cost Index Increase Eased Slightly During 4Q; 2008 Gain A Record Low
by:Tom Moeller
|in:Economy in Brief
Summary
Weak job markets have held down compensation. For private industry workers, the employment cost index increased by 0.5% during 4Q. The rise eased slightly from the 0.6% 3Q increase and it left costs up 2.9% for the full year. That was [...]
Weak job markets have held down compensation. For private industry workers, the employment cost index increased by 0.5% during 4Q. The rise eased slightly from the 0.6% 3Q increase and it left costs up 2.9% for the full year. That was down slightly from the 3.1% rise during 2007 and the quarterly gain fell short of Consensus expectations for a 0.7% rise. A notion of weakness in compensation growth was emphasized by the 4Q-to-4Q rate of increase of 2.4%. That was the weakest in the series' history which extends back to 1980.
Health benefit costs rose 3.5% y/y and that was the slowest rate of growth since 1998.
Wage and salary growth of 0.3% was half the rate of increase during 3Q. Wages account for roughly 70% of the compensation index. The 4Q-to-4Q gain of 2.6% clearly was restrained by the weak job market and it was the weakest increase since 2006. Wages in the services industries grew a modest 0.3% and the y/y gain of 2.6% also was the weakest since 2006. Wages in the goods producing industries rose 0.4% (2.8% y/y) and that y/y growth compares to a recent peak of 4.0% in 2000.
| ECI - Private Industry Workers (%) | 4Q '08 | 3Q '08 | 4Q Y/Y | 2008 | 2007 | 2006 |
|---|---|---|---|---|---|---|
| Compensation | 0.5 | 0.6 | 2.4 | 2.9 | 3.1 | 2.9 |
| Wages & Salaries | 0.3 | 0.6 | 2.6 | 3.0 | 3.4 | 2.9 |
| Benefit Costs | 0.2 | 0.5 | 2.0 | 2.5 | 2.4 | 2.9 |
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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