The Q3 Employment Cost Index was higher by .7% q/o/q as expected and is vs .5% growth in Q2 and .8% in Q1. Versus last year, the ECI was up by 2.5% which happens to be the quickest since Q1 2015 vs 2.4% last quarter. Private sector wages/salaries grew by 2.6% y/o/y which matches the best also since Q1 2015. Private sector wage growth was particular good in manufacturing and professional services q/o/q.
EMPLOYMENT COST INDEX YOY
Bottom line, while not as quick as we want, the chart clearly shows an upward trend in wage growth and the same can be said for the Atlanta Wage Growth Tracker in the chart below. Whether you think they should or note, the Fed does focus on the dropping unemployment rate and what that means for wage inflation and then in turn price inflation. As the data was in line with expectations, US Treasuries didn’t respond.