The Bureau of Labor Statistics on Tuesday released data showing that compensation for Americans has grown significantly faster than anticipated in the three months of the year—but it also indicates to Federal Reserve officials that inflation pressures aren’t yet easing.
The BLS’ Employment Cost Index (ECI) increased a seasonally adjusted 1.2% during the first three months of the year, compared to 0.9% growth during the last three months of 2023. The acceleration was attributed to higher benefit costs, which rose from 0.7% in 2023’s fourth quarter to 1.1% this quarter. Wage and salary growth remained the same at 1.1%.
Economists believed that the quarterly growth would be around 0.9%. The news negatively impacted the stock market Tuesday, with futures on the Dow, S&P 500 and Nasdaq Composite all falling.
Fed officials uses the ECI as its preferred wage tracker because it offers a more comprehensive measurement of data by showing the cost of benefits for workers, along with wages. Additionally, the index considers changes in the composition of employment, meaning that it measures wage costs for the same jobs over time.
