Preview: Due July 31 - U.S. Q2 Employment Cost Index - Losing momentum
We look for the Q2 employment cost index (ECI) to increase by 0.7%, slower than Q1’s 0.9% but matching the Q4 outcome. This would see the yr/yr pace slow to 3.2% from 3.4%, reaching its slowest since Q2 2021.
We expect a 0.7% increase in wages and salaries, which would be consistent with a modest slowing from payroll average hourly earnings. This would also be a slowing from 0.8% in Q1 but matching a 0.7% rise in Q4.
We also expect a 0.7% rise in benefit costs, down from a strong 1.2% increase in Q1, a quarter that is often volatile due to the annual update of health insurance premiums. CPI data shows that medical care inflation slowed in Q2 after a strong Q1.
While slower, yr/yr growth at 3.2% from 3.4% will remain above the pre-pandemic trend that was slightly below 3.0%. We expect wages and salaries to slip to 3.0% from 3.0% but benefits to remain stable at Q1’s 3.6% yr/yr pace.
