United States Employment Cost Index q/q

US Employment Cost Index q/q is a report from the US Department of Labor. It measures the growth of employee compensation in the given quarter compared to the previous one. The index is calculated based on surveys of employers in the final month of each quarter.

The index calculation includes wages, benefits and bonuses paid to employees at all levels of the company. The index takes into account a wide range of benefits and additional pays, such as annual and compensatory leaves, sick leaves, insurance payments, pension. Employment cost is measured for employees of private companies, state institutions and local self-government bodies (also called civilian workers). The index does not include payments to federal government employees, military personnel, farm company employees, volunteers and other unpaid workers, employees of private households and self-employed individuals. The index is calculated separately for different sectors (NAICS classification is used).

The index is a weighted value of the total average change of wages, while industry components have fixed weights. Structural components are sorted by three main property sectors: private companies (59 categories), state and local authorities (13 categories).

Analysts interpret the index as a metric of wage inflation, which shows whether labor costs in the country are growing or falling. If wages grow, the overall inflation in the country also increases, since the increase in compensation costs of employers leads to an increase in the final cost of services or goods produced. This, in turn, provides the Fed information for developing the economic policy.

Growth in employment costs is seen as positive for the US dollar, because it is an indication of inflation growth.