At the beginning of the year, Americans' salaries increased more than anticipated, which is a further indicator of ongoing inflation in the United States.
Employment Cost Index in Q1 Shows 1.2% Rise in Worker Pay
According to a Labor Department report published on Tuesday, April 30, the Employment Cost Index (ECI) tracking compensation and benefits for workers increased by 1.2% in the first quarter. That was better than the 0.9% growth predicted by the Dow Jones consensus for the fourth quarter of 2023 and above the actual increase of 1%.
However, the salary growth adds to worries that the Federal Reserve's 11 instances of interest rate increase have failed to alleviate pricing pressures, and it will likely keep the central bank on hold until it can begin relaxing monetary policy.
The ECI is a key indicator of underlying inflation pressures that the Fed keeps an eye on.
Employer Compensation Expenditures for Civilian Workers Increase 4.2% Annually
According to CNBC, compensation costs of employers for civilian workers grew 4.2% year-over-year, which is still more than what the Fed considers compatible with its 2% inflation goal, although it is lower than last year's 4.8% rise. The cost of benefits grew by 3.7%, while wages and salaries climbed by 4.4%.
Compensation expenditures of state and local governments for its workers increased 4.8%, a small decrease compared to the same time in 2023.
Another indicator of inflation concerns was the Conference Board's Consumer Confidence Index. A drop of 6.1 points brought the index down to 97, falling short of the 103.5 predicted by Wall Street.
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