U.S. labour costs ebb in 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 --