Compensation cost growth for US workers slows in the fourth quarter of 2022

According to the US Department of Labor, in seasonally adjusted terms the quarter-on-quarter rate of increase in total compensation costs slowed from the quarterly annualised pace of 1.2% seen during the third quarter of the previous year to 1.0% in the fourth (consensus: 1.2%).

Wage and salary growth meanwhile slipped from 1.3% to 1.0% and that of benefits from 1.0% to 0.8%.

The slowdown however centred on the public sector, where compensation growth ratcheted down from 1.9% to 1.0% as the pace of increase in wages was nearly half that seen over the three months to September.

In the private sector on the other hand compensation growth dipped from 1.1% to 1.0% with wage growth slowing from 1.2% to 1.0%.

"We estimate that core private sector wages, ex-incentive pay, rose only 0.9%, slower than the headline wage numbers; the annualized rate was only 3.7%, putting wage growth back to a pace consistent with the 2% inflation target - or lower - if sustained in the medium term," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

"The key message here is that Chair Powell’s oft-expressed fear of the risk of a wage-price spiral is no longer realistic."

-- More to follow --