Slight Pick-Up in Wage Growth Likely, BNA Index Says
ARLINGTON, Va., Jan. 18, 2012 /PRNewswire-USNewswire/ — Private sector workers likely will see slightly fatter wage increases in the coming months, according to the final fourth quarter Wage Trend Indicator(TM) (WTI) released today by Bloomberg BNA, a leading publisher of specialized news and information.
The forward-looking index rose in the fourth quarter for the sixth straight time, to 98.52 (second quarter 1976 = 100) from 98.36 in the third quarter.
“Barring any major shocks to the U.S. economy, we expect modest acceleration in wage growth during the course of 2012,” economist Kathryn Kobe, a consultant who maintains and helped develop Bloomberg BNA’s WTI database, said. “The uncertainty about the economic outlook is still quite high, particularly with the European debt crisis still sitting out there as a big question mark,” Kobe said.
Annual gains for private sector workers are expected to improve in 2012 from the 1.7 percent increase reported by the Department of Labor for the third quarter of 2011, but are unlikely to exceed 2.0 percent, as measured by the employment cost index (ECI).
Reflecting recent labor market conditions, four of the WTI’s seven components made positive contributions to the final fourth quarter reading, while three factors were negative.
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 a deceleration in the rate of private sector wage increases, while a sustained increase forecasts greater pressure to raise wages.
Contributions of Components
Of the WTI’s seven components, the four positive contributors to the final fourth quarter reading were job losers as a share of the labor force, reported by DOL; forecasters’ expectations for the rate of inflation, compiled by the Federal Reserve Bank of Philadelphia; and the share of employers planning to hire production and service workers in the coming months and the proportion of employers reporting difficulty in filling professional and technical jobs, both tracked by BNA’s quarterly employment outlook survey. The negative factors were the unemployment rate and average hourly earnings of production and nonsupervisory workers, both reported by DOL, and industrial production, measured by the Federal Reserve Board.
BNA’s Wage Trend Indicator(TM) 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 BNA’s WTI home page at http://www.wagetrendindicator.com.
The next report of the Wage Trend Indicator(TM) will be released on Wednesday, Feb. 15, 2012 (preliminary first quarter)
Bloomberg BNA, a wholly-owned subsidiary of Bloomberg L.P., is a leading source of legal, regulatory, and business information for professionals. Bloomberg BNA analysts produce more than 350 news and information products, including the highly respected Daily Labor Report, U.S. Law Week, and Daily Report for Executives.
Dr. Joel Popkin, who is acknowledged as one of the country’s foremost authorities on the measurement and analysis of wages and prices, developed the WTI for Bloomberg BNA. Formerly an official with the Bureau of Labor Statistics, Dr. Popkin has been an analyst observing and predicting the U.S. economic outlook for 40 years. Kathryn Kobe, who worked with Popkin in designing the indicator for Bloomberg BNA, is director of price, wage, and productivity analysis at Economic Consulting Services LLC.
SOURCE Bloomberg BNA