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US: Employment Cost Index
| Consensus | Consensus Range | Actual | Previous | |
| Quarter over Quarter | 0.8% | 0.8% to 0.9% | 0.7% | 0.8% |
| Year over Year | 3.5% | 3.4% to 3.5% | 3.4% | 3.5% |
Highlights
The delayed fourth quarter 2025 employment cost figures appear relatively benign, confirming wages are not a source of inflationary pressure and in fact indicate increasingly loose labor market conditions.
Employment costs are up 0.7 percent in Q4, seasonally adjusted, slowing down following a 0.8 percent rise in Q3 and below the 0.8 percent increased expected in the Econoday survey of forecasters. On year, costs are up 3.4 percent, less than the 3.5 percent growth rate in Q3, which points to stability in employment cost increases. Expectations were for a 3.5 percent rise.
For Q4, wages and salaries are up 0.7 percent and benefit costs are also up 0.7 percent, following increases of 0.8 percent, respectively in Q3. Wages and salaries for private sector workers rose 0.7 percent (vs. +0.8 percent in Q3) and benefit costs increased 0.7 percent following a 0.8 percent rise in Q3.
Wages and salaries rose 3.3 percent for the 12-month period ending in December 2025. Benefit costs increased 3.4 percent. This compares to increases of 3.5 percent, respectively, for the 12-month period ending in September 2025. Private sector wages and salaries are up 3.3 percent over the 12-month period (compared to +3.7 percent a year ago), while benefit costs rose 3.4 percent.
Market Consensus Before Announcement
Employment costs are seen up 0.8 percent again in Q4 after rising 0.8 percent in Q3.
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.