Wage growth bounced back in the US.
The latest employment-cost index (ECI) from the Bureau of Labor Statistics on Friday showed that in the third quarter wages for American workers rose by 0.6%.
Expectations were for the report to show the ECI rose 0.6% in the third quarter after a 0.2% increase in the second quarter, which was the slimmest gain on record.
But despite the rebound in quarterly wage gains, over the last 12 months total compensation is up 2%, the same yearly gain seen in the second quarter.
The employment-cost index has become more closely followed of late as it is a more comprehensive reading on worker compensation taking into account not just wages but benefits as well.
In a note to clients following the report, Ian Shepherdson at Pantheon Macro said, “In one line: Rebound, but no reversal of Q2 softness; no clear signal for the Fed.”
Shepherdson added that after the unexpectedly small 0.2% increase in Q2, the ECI has reverted to the prior trend. We expected an overshoot to follow the undershoot, so the sluggish second quarter number remains an uncorrected outlier … In short, you can use these data to tell whatever story you want.”
In the first quarter, a 2.3% year-on-year increase in the ECI led many economists to argue that despite tepid average-hourly-wage figures, wages pressures were indeed building in the economy.
And while anecdotal evidence from companies in the service industry in particular indicates that wage pressures are building, the carryover to economic data is still lagging.