US: Q2 Employment Cost Index likely to print 0.6% - Westpac

Analysts at Westpac are looking for a 0.6% rise in US Q2 Employment Cost Index and suggests that the wage gain could be stronger.

Key Quotes

“Q1 finally saw a stronger wage outcome, total compensation rising 0.8% in the three months to March. This was driven by a 0.8% gain for wages, although benefits also rose 0.7%. Compensation is up 2.4%yr; wages 2.5%yr.”

“The strength shown in the labour market should see wages growth accelerate. However, the pass through has been underwhelming to date, hence further progress is likely to be slow going.”

“It is important to note that an eye also needs to be kept on benefits growth, with private-sector employers clearly using this component of consumption to offset demands for stronger wages from workers.”

“Given the above, we look for a 0.6% rise for total compensation, though the wage gain could be stronger. That will keep the annual rate for compensation unchanged.”