U.S. employment cost index roses below expectations in Q2 2018

The U.S. employment cost index indicates that wage costs are rising gradually. The employment cost index was up 0.6 percent quarter-on-quarter in the second quarter, slightly below consensus expectations of 0.7 percent. On a year-on-year basis, the ECI rose to 2.8 percent from 2.7 percent. Wages and salaries growth decelerated significantly to 0.5 percent sequentially from first quarter’s 0.9 percent, while benefits were stronger at 0.9 percent.

In all, the trend in annual employment cost index growth continues to be modes compared with its pre-crisis history, particularly considering how fast the jobless rate has fallen and the continued rise in employment, noted Barclays in a research report. Muted wage pressures are apparent in other wage measures including average hourly earnings. However, there are signs of wage prices starting to gain momentum gradually, stated Barclays.

Delving into details, both services and goods providing industries rose at a similar rate by 0.6 percent. Within goods, construction employment costs rose strongly by 1 percent, countering some of the softness in aircraft manufacturing Aircraft employment costs had risen 1.6 percent previously and the latest print is seen as reversing some of that outsized gain. Within services, strong readings were seen for information and financial services being offset to some extend by softness in professional business services and leisure and hospitality, said Barclays.

At 17:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was slightly bearish at -68.36. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex