ECI rises 1.1% in Q3, a bit more than expected

• Q3 Employment Cost Index: +1.1% Q/Q vs. +1.0% consensus and +1.0% in Q2.
• Wages and salaries rose 1.2% and benefit costs increased 0.9% from June 2023.
• Compensation costs for civilian workers rose 4.3% for the 12-month period ended September 2023, slowing from the 5.0% Y/Y increase in September 2022. Wages and salaries rose 4.6% for the year ended September 2023 vs. 5.1% for the year ended September 2022. Benefit costs rose 4.1% Y/Y, down from the 4.9% rate in the previous year.
• Among private industry occupational groups, compensation costs increases for the 12 months ended September 2023 ranged from 3.9% for production, transportation, and material moving occupations to 4.5% for service occupations, the Bureau of Labor Statistics said.

“FED does not want to see an ECI that’s increasing too quickly,” said Nicole Smith, chief economist at Georgetown’s Center on Education and the Workforce. “But one that is moving, at least in tandem, with inflation. Or at least maintaining the purchasing power of individuals.”

That means even if the ECI continues to slow, it probably won’t be unwelcome news for the Fed as it tries to tamp down inflation by slowing the economy.