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Private sector labor costs rise more than expected in Q2
The Employment Cost Index increased 0.9% in the second quarter, while economists expected 0.8%, and the 12-month wage measure slowed to 3.4% through June.
U.S. labor costs edged higher in the second quarter as private-sector wage growth picked up, according to the Labor Department’s Employment Cost Index released by Reuters. The report showed the jobs market was not the main driver of inflation pressures, despite some acceleration earlier in the quarter. The Employment Cost Index, the broadest measure of labor costs, rose 0.9% last quarter, topping the 0.8% increase economists had forecast. The 12 months through June saw labor costs rise 3.4%, after a similar gain in the prior period through March. Wages and salaries, which make up most labor costs, increased 0.9% in the second quarter after rising 0.8% in the first quarter. Over the year through June, wages rose 3.2% after advancing 3.4% in the year through March, while inflation-adjusted wages fell 0.3% over the same period. Reuters reported the wage strength was concentrated in goods-producing industries, with job growth accelerating between March and May before momentum faded in June. BMO Capital Markets economist Priscilla Thiagamoorthy said strong job gains in the quarter did not translate into meaningful wage pressures, which she said could reassure policymakers as consumer inflation remains above the 2% target.