Employment Cost Index Rises 0.2% in Q2

WASHINGTON — The U.S. second quarter employment cost index was below expectations at a 0.2% increase, with wages and salaries up 0.2% and benefits 0.1% higher, all very subdued results that argue labor market tightness is not severe.

The Q2 ECI produced a 2.0% increase pace over the year, showing no signs of labor cost acceleration. This is down from a 2.6% rise in Q1 and the same 2% gain over-the-year pace as in Q2:14.

Both wages and benefits decelerated during the period. Wages in particular, at about 70% of the overall index, are on a subdued pace of a 2.1% rise over the year.

Breakdown data show service union costs fell, as did costs in the Northeast (the NE came after a 4.6% surge in Q1, probably a result of additional pay to clear snowstorm damage that then reversed).

One cautionary note in the data was that employer costs for health benefits posted a 2.8% increase over the year, compared to a 2.7% rise last year at this time. This shows that insurance and health payments remain more costly.

The most recent ECI data are very favorable for bonds and argue that the labor market still has some slack.

Market News International is a real-time global news service for fixed-income and foreign exchange market professionals. See www.marketnews.com.

Market News International is a real-time global news service for fixed-income and foreign exchange market professionals. See www.marketnews.com.
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