U.S. labour costs ebb in second quarter

The cost of labour in the States ebbed during the second quarter.

According to the U.S. Department of Labor, in seasonally adjusted terms, the Employment Cost Index rose by 1.0% quarter-on-quarter, down from 1.2% over the three months to March.

Economists had forecast a rise of 1.1%.

Within total employment costs, or total compensation, wage and salary growth slipped from 1.2% to 1.0% and that of benefits from 1.2% to 0.9%.

In year-on-year terms, total compensation growth slipped from 4.8% in the first quarter to 4.5%.

Salary growth slowed from 5.0% to 4.6% and that of benefits from 4.5% to 4.2%.

"Wages rose 1.0%, the smallest increase since Q2 2021, but the y/y rate is still elevated, at 4.6%, and even the q/q annualized rate, 4.1%, is above the 3-1/2%-ish pace usually considered consistent with the inflation target," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

"But the numbers are headed in the right direction; y/y ECI wage growth peaked at 5.7% in the second quarter of last year, so the progress is clear."

Looking ahead, we expect a further, and probably faster, downshift in the rate of increase in the ECI across the second half.

-- More to follow --