Global| Apr 30 2008U.S. Employment Cost Index Steady At 0.8% Quarterly Increase
by:Tom Moeller
|in:Economy in Brief
Summary
Rising 0.8% last quarter, the employment cost index for private industry workers remained about steady with the 4Q '07 increase. The gain matched Consensus expectations. In addition, the gain in total compensation in 1Q was roughly [...]
Rising 0.8% last quarter, the employment cost index for private industry workers remained about steady with the 4Q '07 increase. The gain matched Consensus expectations. In addition, the gain in total compensation in 1Q was roughly steady at 3.2% with the gains since 2005.
During the last twenty years there has been a 54% correlation between the growth in employee compensation and the rise in the PCE price index. That level of correlation goes neither up or down, when either series is led or lagged the other. This suggests a self reinforcing effect between the two series.
Wage and salary growth held steady at 0.8%. Wages account for roughly 70% of the compensation index. Wages in the services industries rose 0.7% (3.2% y/y). Wages in the goods producing industries rose at an accelerated 1.0% (3.2% y/y).
The rise in benefit costs eased to 0.6% after a 0.8% 4Q rise. The rise in benefit costs in the service producing industries slipped to 0.6% (3.3% y/y) but in the goods producing sector benefits rose 0.8% (3.1% y/y). That is double the recent rates of growth.Health benefit costs rose a steady 4.6% y/y.
| ECI- Private Industry Workers | 1Q '08 | 4Q '07 | 3Q '07 | 1Q Y/Y | 2007 | 2006 | 2005 |
|---|---|---|---|---|---|---|---|
| Compensation | 0.8% | 0.9% | 0.8% | 3.2% | 3.1% | 2.9% | 3.1% |
| Wages & Salaries | 0.8% | 0.8% | 0.8% | 3.2% | 3.4% | 2.9% | 2.5% |
| Benefit Costs | 0.6% | 0.8% | 0.8% | 3.2% | 2.4% | 2.9% | 4.6% |
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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