Updated: 29-Jan-10 09:15 ET

Q4 Employment Cost Index

Updated: 29-Jan-10 09:15 ET

Highlights

• Employment costs increased 0.5% in the fourth quarter of 2009 after increasing 0.4% in the third quarter.
• The consensus expected unemployment costs to rise at the same rate as the third quarter.

Key Factors

• Both wages and salaries and employee benefits rose 0.5%.
• Private industry compensation rose 0.4% in the fourth quarter after increasing 0.5% in the third quarter. State and local government compensation increased 0.5% in the fourth quarter, up from no growth in the third quarter.
• In private occupational employment, financial management employees saw the biggest gains in compensation with a 0.8% quarterly increase. In private industry employment, utility service provider compensation rose 1.4%.

Big Picture

• Employment costs are the major component of business costs.  The trend in these data therefore have important implications for cost-push inflationary pressures and for profit margins.  In recent quarters, the trend has been relatively steady to lower.  The year-over-year total increase in the ECI is now below 2.0%. Weak overall demand in the economy should keep the ECI cost index on the current trend.

Category	Q4	Q3	Q2	Q1	Q4
Quarterly Changes
Total ECI	0.5%	0.4%	0.4%	0.3%	0.6%
Wages and Salaries	0.5%	0.4%	0.4%	0.3%	0.5%
Benefits	0.5%	0.4%	0.3%	0.5%	0.5%
Year/Year Changes
Total ECI	1.5%	1.5%	1.8%	2.1%	2.6%
Wages and Salaries	1.5%	1.5%	1.8%	2.2%	2.7%
Benefits	1.5%	1.6%	1.8%	2.0%	2.2%