U.S. employment cost index rises in Q3

The U.S. employment cost index rises in the third quarter of this year. The ECI rose 0.7 percent sequentially, coming in line with consensus expectations. The ECI inflation decelerated a bit in the second quarter, but that appears to have been reversed in the third quarter and it implies that faster wage gains might be recorded this year.

On a year-on-year basis, the ECI rose to 2.5 percent. Growth in wages and salaries also strengthened and benefits were slightly stronger at 0.8 percent quarter-on-quarter. In all, the trend in annual ECI growth continues to be quite modest, particularly in light of how fast the jobless rate declines and the continued rise in employment. Muted wage pressures are clearly seen in other wage measures including average hourly earnings.

Industry wise, the manufacturing sector stands out for reporting a solid 1 percent sequential rise in the third quarter, driven by an 8.4 percent rise in aircraft manufacturing employment costs. This is the strongest reading for this series since the first quarter of 2005.

“We would expect this sharp acceleration to be wound down in Q4, which might lead overall ECI to report a more modest increase all else equal”, noted Barclays in a research report.

Meanwhile, construction employment costs rose modestly by 0.5 percent, while services were up 0.7 percent.

At 18:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was slightly bullish at 59.6189. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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