Latest News

Economic Report: U.S. employment cost pressures remain hot in second quarter

0

The numbers: The employment cost index rose 1.3% in the second quarter, down slightly from a 1.4% gain in the January-March quarter, the Labor Department said Friday. Economists polled by the Wall Street Journal had forecast a 1.1% increase.

The slight decline masked rising wage pressures in the economy.

Over the past year, the ECI rose at a 5.1% rate, compared with a 4.5% rate in the first quarter.

Key details: Wages rose 1.6% in the second quarter, up from 1.3% in the prior three months. Wages make up 70% of total compensation. Year-over-year, wages rose at a 5.7% rate, compared with a 5% rate in the first three months of the year.  

Benefits increased 1.3% in the April-June quarter after a 1.9% gain in the prior quarter . They account for the rest of worker compensation.  Year-on-year, benefits rose at a 5.3% rate, up from 4.1% in the first quarter.

Big picture: Federal Reserve Chairman Jerome Powell has flagged the employment cost data as key for policymakers as they raise interest rates to try to quell inflation. Labor shortages have been forcing businesses to raise wages and this puts pressure on other prices.

Steven Ricchiuto, chief economist at Mizuho Securities USA, said that an annual gain of 3.7% in the employment cost index would be consistent with inflation running at the Fed’s 2% target.

Market reaction: Stocks
DJIA,
+0.37%

SPX,
+0.96%

were set to open higher Friday on strong earnings reports.

Economic Report: U.S. consumer spending climbs sharply in June, but mostly because of high inflation

Previous article

Jim Cramer Says Now Is the Time to Pull the Trigger on Stocks; Here Are 2 Names That Analysts Like

Next article

You may also like

Comments

Leave a reply

Your email address will not be published.

More in Latest News