The numbers: The U.S. employment cost index, the broadest measure of U.S. labor costs, rose 1% in the second quarter after gaining 1.2% in the first quarter, the Labor Department said Friday.
Economists surveyed by the Wall Street Journal had expected a 1.1% gain.
Compensation climbed at 4.5% clip in the 12 months ended in June, down from 4.8% in the prior quarter.
Key details: Wages and salaries increased 1% last quarter, down from 1.2% in the prior three month period. The 12-month increase in wages was up 4.6%, down from 5% in the first quarter.
Benefits rose 0.9% in the second quarter after a 1.2% gain in the January-March quarter. The 12-month increase in benefits moderated to 4.2% from 4.5% in the first quarter.
Big picture: “Wages and salaries have come off record highs but are rising at an elevated pace,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.
Economists say that compensation in the 3% range is consistent with the Federal Reserve’s 2% inflation target.
Fed Chair Jerome Powell mentions the employment cost data will be important in decided if and when to hike interest rates again.
“Wages are an important issue going forward,” Powell said, at his press conference on Wednesday.
Market reaction: Stocks
DJIA,
SPX,
were set to open higher on Friday while the yield on the 10-year Treasury note
TMUBMUSD10Y,
fell to 3.97%.
This post was originally published on Market Watch
