US: Wage growth hits fresh cycle high - Wells Fargo

According to analysts from Wells Fargo, data released today suggests that labor compensation pressures are rising in the US. They see that wage growth is likely to increase in the quarters ahead, providing support to more rate hikes from the Federal Reserve. 

Key Quotes: 

“The Employment Cost Index increased 0.8 percent in the first quarter and is up 2.7 percent over the past year.”

“The headline ECI beat expectations in Q1, suggesting labor compensation pressures are rising amid the tight labor market. Strength was particularly noticeable in the private sector, where wages & salaries doubled their Q4 pace, increasing 1.0 percent in Q1.”

“Private sector benefits also exhibited strength, rising 0.8 percent in Q1 and 2.5 percent over the past year.”

“The takeaway from today’s report is that wage growth maintains upward momentum, and is likely to pick up further in the quarters ahead. Evidence of strengthening wage growth supports the Fed’s upwardly revised inflation outlook and the need to maintain plans for interest rate hikes over the medium-term horizon.”