Source: Economics Group of Wells Fargo Bank, N.A.Summary
This morning’s Employment Cost Index (ECI) reading offered additional evidence that the gradual softening in the labor market is translating to slower compensation growth. The ECI rose 0.8% quarter-over-quarter (not annualized) and 3.5% year-over-year in Q3, the latter being the softest year-ago reading since Q2-2021. The recent run rate suggests to us that the labor market is not a source of excess inflationary pressure at present.