Arlington, Va. (March 18, 2014) — Workers likely will see higher wage increases overall in private industry later this year, according to the revised first-quarter Wage Trend Indicator™ (WTI) released today by Bloomberg BNA, a leading publisher of specialized news and information.
The index rose for the second consecutive quarter to 98.92 (second quarter 1976 = 100) from 98.77 in the fourth quarter of 2013.
“All labor market indicators are giving green lights right now, although employment growth has been fairly weak,” economist Kathryn Kobe, a consultant who maintains and helped develop Bloomberg BNA’s WTI database, said. “The WTI is forecasting that we’re going to see modest upward pressure on wages later in the year.” she said.
Kobe said she expects year-over-year wage growth in the private sector to rise slightly above 2.1 percent later in 2014. That was the gain recently reported by the Labor Department for 2013, according to the employment cost index (ECI). The WTI forecasts whether the rate of wage growth is accelerating or decelerating, but not the amount of the change.
Over its history, the WTI has predicted a turning point in wage trends six to nine months before the trends are apparent in the ECI. A sustained increase in the WTI forecasts greater pressure to raise private sector wages, while a sustained decline is predictive of a deceleration in the rate of wage increases.
Reflecting recent economic conditions, five of the WTI’s seven components made positive contributions to the revised first-quarter reading, while one factor was negative and another was neutral.
Contributions of Components
Among the WTI’s seven components, the five positive contributors to the revised first-quarter reading were the unemployment rate and job losers as a share of the labor force, both measured by DOL; forecasters’ expectations for the rate of inflation, compiled by the Federal Reserve Bank of Philadelphia; and the shares of employers planning to hire production and service workers in the coming months and reporting difficulty in filling professional and technical jobs, both taken from Bloomberg BNA’s quarterly employment outlook survey. The negative factor was industrial production, reported by the Federal Reserve Board. The neutral component was average hourly earnings of production and nonsupervisory workers, from DOL.
Bloomberg BNA's Wage Trend Indicator™ is designed to serve as a yardstick for employers, analysts, and policymakers to identify turning points in private sector wage patterns. It also provides timely information for business and human resource analysts and executives as they plan for year-to-year changes in compensation costs.
The WTI is released in 12 monthly reports per year showing the preliminary, revised, and final readings for each quarter, based on newly emerging economic data.
More information on the Wage Trend Indicator is available on Bloomberg BNA's WTI home page at http://www.bna.com/wage-trend-indicator-p12884902670/.
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