Employment costs moderated at the end of 2022 back to levels that are still historically strong, according to the employment-cost index (ECI). Private and total workers saw compensation rise 1% in Q4 (seasonally adjusted), and 5.1% on the year. This followed a 1.2% increase for September quarter. Benefit costs increased 0.8% (versus 1.0% prior). Fed officials have said they pay close attention to the employment-cost index, seeing it as a comprehensive measure of wage growth. Wages and salaries account for about 70% of compensation costs, and benefit costs increased 0.8% (versus 1.0% prior).
Employment costs did moderate in the fourth quarter, which is what the Fed has been concerned about in their fight against inflation.
The ECI component that is of greatest relevance to the Fed, is wages and salaries for private sector workers excluding incentive paid occupations. This rose 0.8% in Q4 and was up 5% over the previous year. Quarter to quarter it has moderated from rising 1.1% in Q3 and 5.3% on a YoY basis in September.
- Total compensation costs for civilian workers increased 5.1% for the 12-month period ending in December 2022 versus 4.0% in December 2021. Wages and salaries rose 5.1% for the 12-month period ending in December 2022 versus 4.5% for December 2021. Benefit costs rose 4.9% for the 12-month period ending in December 2022 versus 2.8% for December 2021.
- Compensation costs for private industry workers rose 5.1% for the 12-month period ending in December 2022 versus 4.4% in December 2021. Wages and salaries increased 5.1% for the 12-month period ending December 2022 versus 5.0% for December 2021. Benefit costs increased 4.8% for the 12-month period ending in December 2022 versus 2.9% for December 2021.
- Compensation costs for state and local government workers rose 4.8% for the 12-month period ending in December 2022 versus 2.6% for December 2021. Wages and salaries increased 4.7% for the 12-month period ending December 2022 versus 2.7% for December 2021. Benefit costs increased 5.0% for the 12-month period ending December 2022 versus 2.5% for December 2021.
The labor market nevertheless remains exceptionally tight, with the unemployment rate matching a half-century low at 3.5% in December.
Layoffs continue but jobs are finding it difficult to be filled in some area, sometimes in the same company. General Electric is laying off about 2,000 workers from its onshore wind business but is hiring elsewhere in the company. “If you know any welders or machinists, send them my way,” GE Chief Executive Larry Culp said last week. Manufacturing and construction companies continue to work through order backlogs that built up earlier in the pandemic.
Source: BLS
From the TradersCommunity News Desk