US: Labor costs to climb faster over the next year - Wells Fargo

Today’s data showed that the Employment cost index rose 0.8% during the third quarter. Analysts at Wells Fargo, point out it was led by a 0.9% increase in wages. With the labor market continuing to tighten, they expect costs to climb faster over the next year. 

Key Quotes: 

“Labor costs continued to climb over the third quarter, with the ECI increasing slightly faster than expected at 0.8%. Over the past year, the ECI is up 2.8% versus 2.5% this time last year.”

“Compensation costs grew faster in Q3 due to a pickup in the wages component. Wages & salaries strengthened by 0.9% over the quarter. Private sector wages are up 3.1% over the past year, which is the strongest pace of the expansion.”

“Employment costs are likely to increase further in the coming months as a large share of businesses plan to raise compensation. We expect the ECI to rise 3.1% in 2019.