Preliminary BNA Index Points to Stronger Wage Growth

February 17, 2011

ARLINGTON, Va., Feb. 17, 2011 /PRNewswire-USNewswire/ — The pace of wage growth in the private sector is expected to accelerate in the coming months, according to the preliminary first quarter Wage Trend Indicator(TM) (WTI) released today by BNA, a leading publisher of specialized news and information.

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The WTI increased to 98.00 (second quarter 1976 = 100), up from 97.42 in the fourth quarter of 2010. If confirmed by the revised and final readings, it would be the third straight gain in the forward-looking indicator.

“Labor market conditions are beginning to show some improvements,” said economist Kathryn Kobe, a consultant who maintains and helped develop BNA’s WTI database. “The latest index is signaling a slightly stronger outlook for wage gains,” Kobe said.

The rate of annual wage and salary growth for private sector workers in the coming months is expected to be close to 2.0 percent, Kobe said. Over the 12 months ended in the fourth quarter, wages grew 1.8 percent, according to the Department of Labor’s employment cost index (ECI), up from a 1.3 percent increase in 2009.

Reflecting improved labor market conditions, five of the WTI’s seven components made positive contributions to the preliminary first quarter reading, while two components were neutral.

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 five positive contributors to the preliminary first quarter reading were average hourly earnings of production and nonsupervisory workers, the unemployment rate, and job losers as a share of the labor force, all reported by DOL; industrial production, measured by the Federal Reserve Board; and the share of employers planning to hire production and service workers in the coming months, tracked by BNA’s quarterly employment survey. The neutral components were the proportion of employers reporting difficulty in filling professional and technical jobs, as measured in BNA’s survey, and economic forecasters’ expectations for the rate of 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(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, March 16, 2011 (revised first quarter)

BNA is a leading 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 Daily Report for Executives.

Dr. Joel Popkin, who developed the WTI for BNA, 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 40 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(TM) reports by e-mail on a regular basis, contact Jerry Walsh, BNA PLUS, 800-372-1033.


Source: newswire

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