--US Q4 employment cost index +0.8% from Q3; +4.1% from year ago
--US Q4 employment cost index +0.8% smallest increase since Q3 1999
--US Q4 wages +0.7% from Q3; benefits +0.8%
--US Q4 wages +3.8% from year ago; benefits +4.9%
--US Q4 private wages +0.7% from Q3; +3.9% from year ago
By Simon Kennedy and Andrew Williams, BridgeNews
Washington--Jan. 25--The cost of employing a U.S. worker rose a seasonally adjusted 0.8% in the final quarter of 2000, the smallest increase since the third quarter of 1999, the Labor Department said Thursday. During 2000, the increase in the employment cost index decelerated in each quarter. The rise in the ECI was below economists' expectations of a 1.1% rise. The ECI was up 4.1% from a year ago, compared with the 4.4% advance analysts had expected.
* * * The increase in the ECI, which measures the cost to employers of employee wages, salaries and benefits, was slower than the 0.9% surge in the previous quarter.
The latest 12-month change in the ECI marks a deceleration from the 4.3% rise in the July-September period. However, the 4.1% increase in 2000 was the largest annual increase since 1991.
Evidence that wage inflation decelerated through 2000 is likely to mean the Federal Reserve can continue focus on economic weakness rather than the inflation threat of a tight labor market. Fed Chairman Alan Greenspan testifies to the Senate Budget Committee at 1000 ET Thursday, and the Federal Open Market Committee meets next week to set short-term interest rate policy.
WAGES, SALARIES & BENEFITS:
Wages and salaries in the ECI climbed an adjusted 0.7% in the first quarter from the prior quarter, the smallest increase since the first quarter of 1999, and were up 3.8% from a year ago. In the third quarter, wages were up 0.8%.
Private industry wages rose 0.7% between October and December from the prior quarter.
Meanwhile, cost pressures from the benefits component of the ECI slowed.
Benefits increased 0.8% in after rising 1.0% in the third quarter. Bill Wiatrowski, a Bureau of Labor statistics economist, said that having reached 2.0% increase in the second quarter, benefit costs have trended lower, bringing down the overall index.
Compared to a year ago, benefits were up 4.9%.
WHAT WAS EXPECTED:
Economists surveyed by BridgeNews estimated the ECI increase in a range of up 0.6% to 2.2% in the fourth quarter. For the annual rate, predictions ranged from 3.5% to 4.7%. End
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