(Bloomberg) -- U.S. employment costs accelerated in the secondquarter from a year ago by the most in this expansion on fastergrowth in worker pay and benefits, according to Labor Departmentdata released Tuesday.
Highlights of Employment Cost Index (2Q)- Employment cost index rose 2.8% y/y, the most since 3q 2008, after 2.7% gain
- ECI climbed 0.6% m/m (est. 0.7%) after 0.8% increase
- Wages and salaries rose 2.8% y/y, also the biggest gain since 3q 2008; benefits costs jumped 2.9% y/y, most since 4q 2011
- Private-sector wages and salaries advanced 2.9% y/y for a second quarter
Key Takeaways
The latest results indicate employers are offering bettercompensation packages to workers amid an ongoing shortage ofqualified workers. In another sign of broad-based demand forlabor, the ECI showed increases in manufacturing, constructionand service-related industries.
While labor costs are rising, there are few signs that they'lltrigger heightened inflation pressures. Economists expect theFederal Reserve will still raise interest rates gradually thisyear.
The government's quarterly read on the ECI -- covering employer-paid taxes such as Social Security and Medicare in addition tothe cost of wages and benefits -- offers a comprehensive look athow American workers are being compensated.
Average hourly earnings, a separate monthly measure of private-sector wages that can be influenced by shifts in industryemployment and hours worked, have been rising moderately in thisexpansion relative to the strength of the job market.
Other Details- Employment costs for manufacturers rose 2.9 percent from a year ago; construction up 3 percent and private service providers up 2.9 percent
- Benefit costs in private industry rose 2.8 percent from second quarter of 2017, after increasing 2.5 percent
- Employers costs for health benefits increased 1.6 percent from a year earlier
©2018 Bloomberg L.P.
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