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US: Employment Cost Index
| Consensus | Consensus Range | Actual | Previous | |
| Quarter over Quarter | 0.9% | 0.8% to 0.9% | 0.8% | 0.9% |
| Year over Year | 3.7% | 3.7% to 3.7% | 3.5% | 3.6% |
Highlights
The delayed third quarter employment cost figures appear relatively benign and tend to confirm that wages are not a source of inflation and in fact could indicate increasingly loose labor market conditions.
Employment costs are up 0.8 percent in Q3, seasonally adjusted, slowing down following a 0.9 percent rise in Q2 and below the 0.9 percent expected in the Econoday survey of forecasters. On year, costs are up 3.5 percent, less than the 3.6 percent growth rate in Q2, which points to stability in employment cost increases. Expectations were for a 3.7 percent rise.
For Q3, wages and salaries are up 0.8 percent and benefit costs are also up 0.8 percent, following increases of 1.0 percent and 0.7 percent, respectively in Q2. Wages and salaries for private sector workers rose 0.8 percent (vs. +1.0 percent in Q2) and benefit costs increased 0.8 percent following a 0.7 percent rise in Q2.
Wages and salaries rose 3.5 percent for the 12-month period ending in September 2025. Benefit costs rose at the same rate. This compares to increases of 3.6 percent and 3.5 percent, respectively, for the 12-month period ending in June 2025. Private sector wages and salaries are up 3.6 percent over the 12-month period, while benefit costs rose 3.5 percent.
Market Consensus Before Announcement
ECI expected up 0.9 percent on the quarter and 3.7 percent on year.
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.