• Return to previous page.

Text size:

Printable Version

Final First-Quarter BNA Index Points to Acceleration in Wage Growth

NEWS RELEASE

Contacts:
Karen James Cody,
BNA - Press Contact
Joel Popkin - (202) 466-9063
Kathryn Kobe - (202) 466-7720

Washington, D.C. (April 18, 2006) – BNA's Wage Trend Indicator™ (WTI) continues to forecast a modest pickup in the rate of private-sector wage growth in the coming months, according to final first-quarter figures released today by BNA a Washington, D.C.-based news publisher.

The final first-quarter WTI of 100.19 is up slightly from the fourth-quarter 2005 index of 100.16 (second quarter 1976 = 100), marking the seventh consecutive quarterly gain.

However, the first-quarter 2006 increase was the smallest since the WTI began its most recent climb in the third quarter of 2004, said economist Joel Popkin, who developed the WTI for BNA.

“The WTI had been rising smartly since labor markets started to tighten in July 2004, but I think it would be premature to conclude that it has reached a plateau,” Popkin said. “We'll have to wait and see.”

“Overall, the WTI is still signaling a modest acceleration in the rate of wage increases,” said economist Kathryn Kobe, who worked on the development of the index for BNA.

Private-sector wages in the fourth quarter 2005 were 2.5 percent higher than a year earlier, according to the employment cost index (ECI) produced by the Labor Department's Bureau of Labor Statistics. BLS is scheduled to release the ECI for the first quarter on April 28.

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 decline in the WTI is predictive of deceleration in the rate of wage increases in the private sector. A sustained increase predicts greater pressure to raise wages.

In April, three of the WTI's seven components made positive contributions to the index, while three were negative and one component was neutral, Kobe said.

Contributions of Components

The three components of the WTI that made positive contributions to the preliminary first-quarter index are: employers' hiring plans for production and service workers, as shown by the quarterly BNA Employment Outlook Survey, and the national unemployment rate and job losers as a percentage of the labor force, both from BLS's monthly employment report. The three negative components were industrial production, measured by the Federal Reserve, employers' difficulty in filling professional and technical jobs, from BNA's employment survey, and average hourly earnings from BLS's employment report. One component did not change from the prior quarter and was neutral: the expected rate of inflation, compiled by the Federal Reserve Bank of Philadelphia .

BNA's Wage Trend Indicator™ was 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.

More information on the Wage Trend Indicator is available on BNA's home page at: www.wagetrendindicator.com.

The next report of the Wage Trend Indicator™ will be released on:

Thursday, May 18 (preliminary second quarter 2006)

# # # # #

BNA, Inc. is the foremost publisher of print and electronic news, analysis, and reference products, providing intensive coverage of legal and regulatory developments for professionals in business and government. BNA produces more than 200 news and information services, including the highly respected Daily Labor Report and the Daily Report for Executives .

Dr. Popkin is acknowledged as one of the country's foremost authorities on the measurement and analysis of wages and prices. Formerly an official with the Bureau of Labor Statistics, Dr. Popkin has been an analyst observing and predicting the U.S. economic outlook for almost 35 years. Kathryn Kobe, who worked with Popkin in designing the indicator for BNA, is director of price, wage, and productivity analysis at Economic Consulting Services LLC.

To obtain Wage Trend Indicator™ reports by e-mail on a regular basis, contact Ted Gideon, BNA PLUS, (800) 372-1033.