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Revised First-Quarter BNA Index Forecasts Modest Pickup 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. (March 17, 2006) – BNA's Wage Trend Indicator™ (WTI) continues to point to a modest acceleration in the rate of private-sector wage growth in the coming months, according to revised first-quarter figures released today by BNA, Inc. , a Washington, D.C.-based news publisher.

“The WTI is telling us that the labor markets have strengthened, suggesting that year-over-year increases in wages and salaries should show some improvement over the near term,” said economist Joel Popkin, who developed the WTI for BNA.

Private-sector wages in the fourth quarter 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. That was up from a 2.2 percent increase in the third quarter.

However, the results of BNA's latest quarterly Employment Outlook Survey indicate “a bit of slackening” in the labor market, Popkin said. In the first quarter, 33 percent of employers said they had difficulty in filling professional and technical jobs, down from the 40 percent that reported difficulty in the fourth quarter.

The revised first-quarter WTI of 100.20 is a slight increase from the final fourth-quarter index of 100.16 (second quarter 1976 = 100) and remains above 100 for the second consecutive quarter. The WTI last exceeded 100 from late 1997 through mid-2001.

“Overall, this isn't quite as strong a picture for the labor market as we had a year ago, when we had a larger increase in the WTI in the first quarter of 2005,” said economist Kathryn Kobe, who worked on the development of the index for BNA.

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 March, 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: expected inflation, compiled by the Federal Reserve Bank of Philadelphia.

This month's WTI report incorporates annual revisions to historical data based on revised component data published recently by BLS and the Federal Reserve.

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:

Tuesday, April 18 (final first quarter 2006)

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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.