ACTV - U.S. Employment Costs Reacceleration Incentivises The Fed To Be More Hawkish
2024-05-01 08:45:00 ET
Summary
- US labour costs accelerated in the first quarter, led by the government sector.
- Hikes to state minimum wage levels contributed to higher private sector labour costs.
- This is the Federal Reserve’s favoured measure on labour market inflation pressures and provides further ammunition to justify a hawkish shift at the FOMC meeting.
Labour costs reaccelerate more than expected
We have seen a big jump in the US 1Q employment cost index of 1.2% quarter-on-quarter versus 0.9% in 4Q23, well above the 1% expected and above every single individual forecast in the Bloomberg survey. Not a good look as this is the Federal Reserve's favoured measure of labour costs, and given labour costs are the biggest cost input in a service sector-led economy, such as the US, it can help to keep price pressures elevated. This reinforces the prospect of hawkish messaging from the Fed tomorrow....
U.S. Employment Costs Reacceleration Incentivises The Fed To Be More Hawkish