US Employment Cost Index rises more quickly than expected in Q1

30th Apr 2024 13:26

(Sharecast News) - The cost in the U.S. of employing workers picked up modestly at the start of 2024 amid a jump in benefits.

According to the Department of Labor, the country's Employment Cost Index advanced by 1.2% quarter-on-quarter.

That followed a 0.9% rise over the prior three months and compared to a 1.0% increase forecast by economists.

Wage and salary growth was steady at 1.1% on the quarter, despite gains in both the private and public sectors, while that of benefits sped up from 0.7% to 1.1%.

Commenting on the latest figures, Paul Ashworth, chief North America economist at Capital Economics, said that the latest wage figures did not suggest more rate hikes were needed.

Neither, however, were they consistent with cutting rates.

Wage growth of 4.3% year-on-year was well above the pre-Covid average, but he pointed out that at 2.5% so was labour productivity.

Nonetheless, Fed officials would be "foolhardy" to think that productivity growth would continue at that pace in the near-term.

Hence, he expected them to continue to exhibit caution until wage growth dipped beneath 4%.