Employment Costs: Tip-Toeing in a Less Inflationary Direction

Source: Economics Group of Wells Fargo Bank, N.A.Summary Labor cost growth in the third quarter eased at least incrementally, with the Employment Cost Index rising 1.2% over the three months ending in September. The softening in the ECI in conjunction with the moderation in average hourly earnings and the Atlanta Fed’s median wage tracker should bolster the Fed’s confidence that a wage-price spiral has been kept at bay. However, labor costs continue to rise at a lofty pace. The third quarter’s increase is consistent with a 5.1% annualized increase, which we believe will keep the FOMC on track for historically large rate hikes at its two remaining meetings this year. READ FULL ARTICLE>>