Need To Know News

Q3 Employment Cost Index up 0.8%, marginally less than the expected 0.9% on a quarterly basis. Wages and Benefit costs were both up 0.8% in the June through September period. On an annual basis, Compensation rose 3.3%, unchanged from last quarter’s reading. Wages rose 3.3% on an annual basis, nearly unchanged from the Q2 reading of 3.4%. On a quarter-on-quarter basis, benefit costs fell from 1.3% to .8%. Service worker wages and salaries increased the most at 1.5% versus no increase in wages in the Production, Transportation and Material moving industry. State and Local Government wages increased on par with Management, Professional and related jobs at 0.7%. The smaller than expected increase suggests inflationary pressures, via compensation, are at bay.

The Employment Cost Index measures the change in the cost of labor including salaries, wages and benefits and is reported 4 times a year.  The reading this Wednesday is the last of the year.  ECI topped out at .90 this year with a low reading of .80 in July.  Wage pressures tend to go along with a good economy and have essentially been falling since they reached 1.20 in March of 2004.  The consensus estimate for ECI this quarter is .90%, unchanged from the July reading.  The  FED will  have these data at the FOMC meeting this week but it will be of lesser importance than Q3 Advance GDP.  Indeed, if the FOMC still has inflation on the back burner and credit markets on the front, these data may not be in the FED’s musings at all.  ECI comes out this Wednesday at 8:30am and will likely be over-shadowed  by Q3 GDP which is released at the same time.

Total compensation costs for civilian workers increased a seasonally adjusted 0.9% from March to June 2007. This figure was in line with analyst’s expectations and ahead of last quarter’s increase of 0.8%. Wages and salaries rose 0.8%, a decrease from the previous figure of 1.1% Benefit costs rose 1.3% after remaining largely flat (+0.1%) in the previous three-month period.

Annual compensation costs for civilian workers rose 3.3% for the year ended June 2007, that’s above the 3.0% figure for the year ended June 2006. Wages and salaries drove the increase, as they rose 3.4% vs. a prior reading of 2.8%, while benefit costs remained level at 3.4%. State and local government benefits showed the biggest increase at 6.6% vs. a 5.5% prior reading.

http://www.bls.gov/ect

Gautham Nagesh for Need to Know News at Labor