{"id":272,"date":"2014-07-31T22:10:02","date_gmt":"2014-08-01T02:10:02","guid":{"rendered":"http:\/\/naroffeconomics.com\/?p=272"},"modified":"2014-07-31T22:10:02","modified_gmt":"2014-08-01T02:10:02","slug":"second-quarter-employment-cost-index-and-weekly-jobless-claims","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=272","title":{"rendered":"Second Quarter Employment Cost Index and Weekly Jobless Claims"},"content":{"rendered":"

KEY DATA:<\/strong> ECI (Private, Year-over-Year)): +2.0%; Wages: +1.8%; Benefits: +2.5%\/Claims: 302,000 (up 23,000)<\/p>\n

IN A NUTSHELL:<\/strong>\u00c2\u00a0\u00e2\u20ac\u0153Wage and benefits pressures are barely starting to accelerate even as the labor market continues to strengthen.\u00e2\u20ac\u009d <\/em><\/strong><\/p>\n

WHAT IT MEANS:<\/strong>\u00c2\u00a0If the labor market matters to Fed members and the concern centers around employment costs, then the quarterly Employment Cost Index should be an important number.\u00c2\u00a0 Whether it is or not for others, for me it is another critical part of the picture and right now businesses are still controlling workers costs but maybe not as well as they had been<\/em><\/strong>.\u00c2\u00a0 \u00c2\u00a0Private sector compensation costs rose at a solid pace in the second quarter though that came after an aberrant nonexistent increase in the first quarter. <\/em><\/strong>\u00c2\u00a0\u00c2\u00a0Both wages and benefits jumped<\/em><\/strong>.\u00c2\u00a0 Looking over the year<\/em><\/strong>, though, the increases in total compensation, wages and benefits were all at the top of the range we have seen for the last couple of years but not above it.<\/em><\/strong>\u00c2\u00a0 Public sector costs are rising at the same pace even though wages and salaries are barely budging.\u00c2\u00a0 Looking across occupations, service workers are doing the wors<\/em><\/strong>t, which is not surprise.\u00c2\u00a0\u00c2\u00a0 Whatever gains in compensation we have seen have been centered in the professional and construction worker ranks.<\/p>\n

Jobless claims jumped, but that was expected.<\/em><\/strong>\u00c2\u00a0 Last week\u00e2\u20ac\u2122s report was assumed to be a bit too low due to the random nature of vehicle sector summer shutdowns.\u00c2\u00a0 The four-week moving average, though, was the lowest in over eight years and that is without adjusting for labor force<\/em><\/strong> size<\/em><\/strong>.\u00c2\u00a0 If the claims numbers relate in any way to job gains, and I believe they do, then the July employment report which comes out tomorrow should be good.<\/em><\/strong>\u00c2\u00a0 Given the robust June gain, I expect July\u00e2\u20ac\u2122s to be lower but we could easily average between 260,000 and 275,000 for the two months.\u00c2\u00a0 That would be impressive.\u00c2\u00a0 The unemployment rate could also decline.\u00c2\u00a0 I would not be shocked if it breaks 6%, though that is not in the forecast for this month.<\/p>\n

MARKETS AND FED POLICY IMPLICATIONS:<\/strong> So far, so good, at least when it comes to controlling employment costs.\u00c2\u00a0 Yes, the second quarter number was hotter than expected but the first quarter rise was strangely minimal.\u00c2\u00a0 Average them out and there was not any major change in the rate of worker cost increases.<\/em><\/strong>\u00c2\u00a0 Benefit expenses have accelerated a touch and wages seem to be moving upward, but the pressures do not look great.\u00c2\u00a0 But the Fed has to look at least six to twelve months down the road and if the unemployment rate keeps declining, unless the law of supply and demand has been repealed for the labor market, compensation pressures simply have to increase.\u00c2\u00a0 The issues are when and how fast.<\/em><\/strong>\u00c2\u00a0 Most members of the Fed appear to believe it will be a lot later and not very rapidly but I am not that sure.\u00c2\u00a0 Tomorrow\u00e2\u20ac\u2122s jobs report will give us another piece of the puzzle and hourly wages should be watched carefully.\u00c2\u00a0 Workers need more income to spend more and power growth to a higher level.\u00c2\u00a0 That does not seem to be happening just yet but I think we will be seeing signs very soon.<\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA: ECI (Private, Year-over-Year)): +2.0%; Wages: +1.8%; Benefits: +2.5%\/Claims: 302,000 (up 23,000) IN A NUTSHELL:\u00c2\u00a0\u00e2\u20ac\u0153Wage and benefits pressures are barely starting to accelerate even as the labor market continues to strengthen.\u00e2\u20ac\u009d WHAT IT MEANS:\u00c2\u00a0If the labor market matters to Fed members and the concern centers around employment costs, then the quarterly Employment Cost Index … Continue reading Second Quarter Employment Cost Index and Weekly Jobless Claims<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3,32,24],"tags":[],"class_list":["post-272","post","type-post","status-publish","format-standard","hentry","category-economic-indicators","category-employment-cost-index","category-weekly-jobless-claims"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/272","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=272"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/272\/revisions"}],"predecessor-version":[{"id":273,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/272\/revisions\/273"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=272"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=272"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=272"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}