A measure of total employee compensation costs, including wages and salaries as well as benefits. The employment cost index (ECI) is the broadest measure of labor costs. Why Investors Care
| Released on 7/31/08 For Q2 2008 | |||||||||||||||||||
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Highlights
Employee compensation is definitely not responding to high gas and food prices. The employment cost index for the second quarter rose 0.7 percent compared to the first quarter for a year-on-year rise of 3.1 percent, the latter down 2 tenths from the prior two quarters. Deceleration is centered in benefits where the 2.9 percent year-on-year pace is down from 3.5 percent in the first quarter. The quarter-to-quarter gain for this component held at 0.6 percent for a second straight quarter, down from 0.8 percent gains in the prior two quarters. The wages & salaries component showed a 0.7 percent quarter-to-quarter gain, down from a string of 0.8 percent readings. The year-on-year rate is unchanged at 3.2 percent.
Whatever the inflation picture is, it doesn't yet include labor costs -- which are the big fear for policy makers. And what appears to be a very loose labor market, following six straight monthly contractions in payrolls, further points away from rising labor costs. But what is a plus for policy makers is a minus for the working class which, not enjoying gains in compensation, has to sacrifice spending elsewhere to make room for the high cost of basic goods.
The employment cost index for civilian workers rose 0.7 percent in the first quarter showing a 3.3 percent year-on-year rate in results that show labor cost inflation essentially holding steady. The index increased 0.8 percent in the prior two quarters. Benefit payments continued a recent trend of easing, slowing to a 0.6 percent quarter-to-quarter rise from a 0.8 percent increase in the fourth quarter. Year-on-year, however, benefits were up 3.5 percent vs. the fourth quarter's 3.1 percent. Rising medical costs and employers pushing more of the burden onto employees are slowing the rise in benefits.
Employment cost index Consensus Forecast for Q2 08: +0.7 percent simple quarterly rate
Range: +0.6 to +0.8 percent simple quarterly rate
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The employment cost index measured total compensation costs which include wages and salaries and also benefits. Benefits include vacations, but the primary mover is health insurance premiums. |
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