U.S. employment cost index rises in Q4 2017, wages and total compensation costs to rise in 2018

The total employment costs in the U.S. continued to accelerate at the end of 2017. The U.S. Fed’s measure, the Employment Cost Index (ECI), rose 0.6 percent sequentially in the fourth quarter of 2017. Cost strength was especially noticeable in the private sector, where wages and salaries rose at a rate of 2.8 percent year-on-year. This matched the most rapid annual rate in this cycle. Several sectors are now starting to run at annual rates of 3 percent or more.

Health care benefit costs rose 1.1 percent year-on-year, with the performance for the entire 2017 the slowest since 1995. While wage rises have been modes and consistent with inflation and productivity growth, the fourth quarter ECI report implies a sustainable change in trend might be in play, noted Wells Fargo in a research report.

“Looking at the fundamental drivers of ECI and AHE, we expect to see wages and total compensation costs to continue to pick up in 2018”, added Wells Fargo.

At 17:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was neutral at 24.0093. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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