In yet another sign the labor market continues to tighten rapidly, the Employment Cost Index rose a record 1.4% in Q1, vastly exceeding expectations. The pickup comes despite increasing availability of labor supply, signaling that cost pressures from the tight labor market will not be easily stomped out. The FOMC is likely to stay on an increasingly hawkish path as a result, given labor costs represent a more persistent threat to the inflation outlook.
Wake Up Call For the Fed
The battle for talent escalated in the first quarter, with the Employment Cost Index jumping 1.4%—the most in the series’ 21-year history and above expectations for a 1.1% gain. The pickup comes despite the increasing availability of labor, signaling that inflationary pressures from the tight labor market will not be easily stomped out. READ FULL ARTICLE>>