Search ForexCrunch

Analysts at Nomura note that the US employment cost index (ECI) showed a 0.8% q-o-q increase for Q3, above expectations (Nomura: 0.5%, Consensus: 0.7%), consistent with steady wage pressure in a tight labor market.

Key Quotes

“Wages and salaries, accounting for roughly 70% of the index, increased 0.9% while benefit costs increased 0.4%. The pickup in wage pressure was relatively broad-based across occupational and industry groups. For private industry workers, wages increased 3.1% y-o-y in Q3, up from 2.9% in Q2.”

“For Friday, we expect a 0.2% m-o-m increase in average hourly earnings (AHE). The sharp decline in AHE from last October will fall out of the 12-month calculation as base effects will likely help to increase the y-o-y rate to 3.1% from 2.8% in September. However, note that weather effects may distort the AHE reading for October due to the impact of Hurricanes Florence and Michael (inclement weather tends to disproportionately impact aggregate hours data).”

“Over the medium term, we expect continued gradual upward pressure on wages as the unemployment rate falls further.”