New data from the Employment Cost Index revealed that wages and benefits experienced a slower-than-expected growth rate in the second quarter, with an increase of just 0.9%, marking the lowest quarterly rate in three years. On an annual basis, compensation costs also decelerated to 4.1%.
Despite these figures, experts suggest that the upcoming jobs report may show an uptick in these metrics. However, caution is advised in interpreting this potential increase. The chief economist at a prominent company highlighted the possible influence of Hurricane Beryl on the data. She explained that the hurricane's impact could lead to a reduction in average hours worked, artificially inflating wage growth due to a lower denominator. Therefore, any rise in wage growth reported in the upcoming jobs report should be viewed with skepticism.
The economist emphasized that various other indicators point towards a cooling trend in wage growth. Notably, job listings are reflecting a slowdown in posted wages, further supporting the notion that the labor market may be experiencing a moderation in compensation increases.
