Wage Trend Indicator Forecasts Modest Gain in Pace of Wage Growth
ARLINGTON, Va., June 19, 2012 /PRNewswire-USNewswire/ — The pace of wage growth in the private sector is likely to continue to accelerate modestly in the coming months, according to the revised second quarter Wage Trend Indicator(TM) (WTI) released today by Bloomberg BNA, a leading publisher of specialized news and information.
The index rose to 98.69 (second quarter 1976 = 100) from 98.42 in the first quarter.
“The latest WTI is indicating modest upward pressure on annual wage increases,” economist Kathryn Kobe, a consultant who maintains and helped develop Bloomberg BNA’s WTI database, said. “At the same time, there is additional uncertainty about the overall economic outlook because of potential headwinds from the debt crisis in Europe and other factors,” Kobe said.
Over its history, the WTI has predicted a turning point in wage trends six to nine months before the trends are apparent in the Department of Labor’s employment cost index (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.
Kobe said that barring a shock to the U.S. economy, she expects annual wage gains in the private sector to reach 2.0 percent or more, compared with a 1.9 percent year-over-year increase in the first quarter, as measured by the ECI. The WTI does not forecast the magnitude of wage growth, only the direction.
Reflecting recent economic conditions, five of the WTI’s seven components made positive contributions to the revised second quarter reading, while two factors were negative.
Contributions of Components
Of the WTI’s seven components, the five positive contributors to the revised second quarter reading were forecasters’ expectations for the rate of inflation, compiled by the Federal Reserve Bank of Philadelphia; job losers as a share of the labor force and average hourly earnings of production and nonsupervisory workers, both reported by DOL; 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 Bloomberg BNA’s quarterly employment outlook survey. The negative factors were industrial production, measured by the Federal Reserve Board, and the unemployment rate, reported by DOL.
Bloomberg 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 Bloomberg BNA’s WTI home page at http://www.bna.com/wage-trend-indicator-p12884902670/.
The next report of the Wage Trend Indicator(TM) will be released on Tuesday, July 17, 2012 (final second quarter)
Bloomberg BNA, a wholly owned subsidiary of Bloomberg, is a leading source of legal, regulatory, and business information for professionals. Its network of more than 2,500 reporters, correspondents, and leading practitioners delivers expert analysis, news, practice tools, and guidance — the information that matters most to professionals. Bloomberg BNA’s authoritative coverage spans the full range of legal practice areas, including tax & accounting, labor & employment, intellectual property, banking & securities, employee benefits, health care, privacy & data security, human resources, and environment, health & safety. www.bna.com
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.
To obtain Wage Trend Indicator(TM) reports by e-mail on a regular basis, contact Jerry Walsh, BNA Research & Custom Solutions, 800-372-1033.
SOURCE Bloomberg BNA