United States October 31, 2023 / 12:45 pm UTC

US Q3 Employment Cost Index (ECI) - Inflationary pressures persist

By Dave Sloan

The Q3 Employment Cost Index with a 1.1% increase is slightly stronger than expected, and an unexpected acceleration from Q2’s 1.0%, and if off the high of 1.4% seen in Q1 2022, still shows a tight labor market generating significant inflationary pressures.

Details show wages and salaries up by 1.2%, up from 1.0% in Q2 and back to the pace seen in Q1 and Q4 2022. While payroll average hourly earnings did show signs of slowing in Q3, this data does not. Benefit costs rose by 0.9%, machining Q2’s pace which was the softest since Q3 2021.

We have now seen nine straight quarters of 1.0% or above. Before these quarters the last quarter to reach 1.0% was back in Q3 2006. Yr/yr growth of 4.4% seasonally adjusted from 4.5% is off the recent high of 5.1% but well above a pre-pandemic trend that was running on the low side of 3.0%. The yr/yr pace is 4.3% before seasonal adjustment.

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Analyst Declaration
I, Dave Sloan, the lead analyst declare that the views expressed herein are mine and are clear, fair and not misleading at the time of publication. They have not been influenced by any relationship, either a personal relationship of mine or a relationship of the firm, to any entity described or referred to herein nor to any client of Continuum Economics nor has any inducement been received in relation to those views. I further declare that in the preparation and publication of this report I have at all times followed all relevant Continuum Economics compliance protocols including those reasonably seeking to prevent the receipt or misuse of material non-public information.