The ECI matched expectations with a 0.9 percent rise in the fourth quarter from the third quarter, up slightly from 0.8 percent in the third quarter from the second. It is up 3.8 percent from a year ago versus 3.9 percent in the third quarter. The results are not startling but point to stability in employment costs rather than the kind of easing in cost pressures the Fed might desire.

In the fourth quarter, wages and salaries about two-thirds of the compensation index -- are up 0.9 percent compared to the third quarter and up 3.8 percent year-over-year. That compares with 0.8 percent and 3.9 percent, respectively in Q3. Benefits costs are 0.8 percent higher compared to the prior quarter and up 3.6 percent year-over-year versus 0.8 percent and 3.7 percent in Q3.

Employment costs are expected up 0.9 percent on the quarter in Q4 versus 0.8 percent in Q3.

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.

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.