Employment costs are up 0.9 percent in Q2 from Q1, above the 0.8 percent expected, seasonally adjusted. On year, costs are up 3.6 percent, the same as in Q1, which points to stability in employment cost increases. That follows unrevised increases on quarter of 0.9 percent and 3.6 percent on year for Q1 from Q4.

For Q2, wages and salaries are up 1.0 percent and benefit costs increased 0.7 percent from Q1.

Wages and salaries rose 3.6 percent for the 12-month period ending in June 2025. Benefit costs rose 3.5 percent for the 12-month period ending in June 2025.

These figures appear relatively benign and tend to confirm the Federal Reserve's view that the labor market is not a source of inflation.

ECI expected up 0.8 percent on quarter versus 0.9 percent in Q1.

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.