| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Quarter over Quarter | 1.0% | 0.7% to 1.0% | 0.8% | 0.9% | |
| Year over Year | 4.1% | 4.1% to 4.2% | 3.9% | 4.1% | 4.2% |
Highlights
The ECI cooled again to a modest 0.8 percent rise in the third quarter from the second quarter while it was up 3.9 percent year on year, more good news for the Federal Reserve officials watching for easing wage pressures. The figures compared with expectations for 1.0 percent and 4.1 percent, respectively. The quarter-over-quarter gain is the smallest since up 0.7 percent in the second quarter 2021. The year-over-year increase is the smallest since up 3.7 percent in the third quarter 2021. While the upward trend for compensation has moderated significantly on an annual basis, increases are still above pre-pandemic levels. Competition for workers with the right skills and experience remains a factor in the labor market even as it has rebalanced to a more normal supply/demand situation.
In the third quarter, wages and salaries about two-thirds of the compensation index -- are up 0.8 percent compared to the second quarter and up 3.9 percent year-over-year. Benefits costs are 0.8 percent higher compared to the prior quarter and up 3.7 percent year-over-year. Wages and salaries costs are coming down while increases for benefit are steadier over time.
In the third quarter, wages and salaries about two-thirds of the compensation index -- are up 0.8 percent compared to the second quarter and up 3.9 percent year-over-year. Benefits costs are 0.8 percent higher compared to the prior quarter and up 3.7 percent year-over-year. Wages and salaries costs are coming down while increases for benefit are steadier over time.
Market Consensus Before Announcement
ECI is seen up 1.0 percent on quarter and 4.1 percent from a year ago.
Definition
A measure of total employee compensation costs: wages and salaries as well as benefits. The employment cost index (ECI) is the broadest measure of labor costs.
Description
The employment cost index is an easy way to evaluate wage trends and the risk of wage inflation. Wage inflation is high on the Federal Reserve's enemy list. Fed officials are always on the lookout for the prospects of inflationary pressures. Wage pressures tend to percolate when economic activity is booming and the demand for labor is rising rapidly. During economic downturns, wage pressures tend to be subdued because labor demand is down.
By tracking labor costs, investors can gain a sense of whether businesses will feel the need to raise prices. If wage inflation threatens, it's a good bet that interest rates will rise, bond and stock prices will fall, and the only investors in a good mood will be the ones who tracked the employment cost index and adjusted their portfolios to anticipate these events.
By tracking labor costs, investors can gain a sense of whether businesses will feel the need to raise prices. If wage inflation threatens, it's a good bet that interest rates will rise, bond and stock prices will fall, and the only investors in a good mood will be the ones who tracked the employment cost index and adjusted their portfolios to anticipate these events.
