U.S. Employment Cost Index rises above expectations in Q1, wage growth momentum to pick up further

The U.S. Employment Cost Index rose in the first quarter, coming in above expectations. The index rose 0.8 percent sequentially, while it rose 2.7 percent year-on-year. The headline ECI implies that labor compensation pressures are rising amidst the tight labor market. Strength was especially marked in the private sector, where wages & salaries doubled their fourth quarter pace, rising 1 percent in the first quarter.

Private sector benefits also showed strength, rising 0.8 percent in the first quarter and 2.5 percent in the past year. The takeaway from the report released today is that wage growth continues with the upward momentum and is expected to further pick up in the coming quarters, noted Wells Fargo in a research report. Evidence of strengthening wage growth underpins the Fed’s upwardly revised inflation outlook and the need to maintain plans for interest rate hikes in the medium-term horizon, added Wells Fargo.

At 19:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was neutral at -46.4184. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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