The employment cost index for civilian workers improved 0.2% in Q2'15 (2.0% y/y), following an unrevised 0.7% Q1 rise. This Q2 performance was the weakest on record and the number fell short of expectations for a 0.6% rise according to the Action Economics Forecast Survey. The ECI for private industry workers remained unchanged (1.9% y/y) following a 0.7% increase. This also was record quarterly weakness.

There was considerable variation in compensation among industry groups in Q2. A 3.6% decline (-2.0% y/y) in information services and a 1.2% shortfall (+1.4% y/y) in professional and business services led the weakness in compensation. Elsewhere, compensation continued to rise at a moderate pace. Manufacturing compensation increased 0.7% (2.5% y/y) and construction workers' compensation also rose 0.7% (2.1% y/y). Leisure & hospitality workers compensation rose 0.6% (2.4% y/y) and financial activities compensation improved 0.6% (2.3% y/y). The trade, transportation and utilities group realized a 0.6% compensation gain (2.4% y/y) but educational services compensation improved just 0.4% (1.9% y/y).

A 0.1% uptick (1.7% y/y) in benefits was the focus of last quarter's weakness in compensation. It was driven by a 0.2% decline (+1.3% y/y) in private industry benefits, dragged down by a 0.4% drop (+1.1% y/y) in service industries. Benefits of natural resource, construction & maintenance workers declined 0.7% (+0.7 y/y) while benefits of management & professional workers fell 0.6% (+1.2% y/y). Goods producing industries benefits rose an improved 0.6% (2.3% y/y) and factory sector benefits also rose 0.6% (2.8% y/y).

Wages & salaries of civilian workers rose 0.2% (2.1% y/y) and private industry wages also gained 0.2% (2.1% y/y). Leisure & hospitality wages improved a strong 0.7%, lifting the y/y increase to 2.6% and up from 0.9% during all of 2013. Information sector wages increased a stable 0.6% (1.8% y/y) and financial industry wages gained 0.2% (2.4% y/y). These gains were offset by a 1.3% decline (+1.6% y/y) in professional & business services. Construction sector wages rose 0.8%, lifting the y/y increase 2.4%, up from 0.8% in 2010. Factory sector wages gained 0.7% and the 2.4% y/y rise was improved from 1.4% in 2009.

Total compensation for state & local government workers rose 0.6% (2.3% y/y) in Q2. Education workers compensation gained a steady 0.6% (2.3% y/y) while health care and social assistance comp rose 0.3% (2.2% y/y).

The employment cost index figures are available in Haver's USECON database. Consensus estimates come from the Action Economics survey, carried in Haver's AS1REPNA database.