Somewhat Stronger Wage Gains Likely Later This Year, WTI Forecasts
ARLINGTON, Va., July 17, 2012 /PRNewswire-USNewswire/ -- Private sector workers likely will see somewhat stronger wage increases overall in the coming months, according to the final second quarter Wage Trend Indicator™ (WTI) released today by Bloomberg BNA, a leading publisher of specialized news and information.
The index rose to 98.67 (second quarter 1976 = 100) from 98.42 in the first quarter.
"The latest WTI indicates the pace of wage growth will strengthen but probably not dramatically so," economist Kathryn Kobe, a consultant who maintains and helped develop Bloomberg BNA's WTI database, said. "We're still seeing mixed signals in the labor market, with small, steady job gains," 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 she expects annual wage gains overall 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 final second quarter reading, while two factors were negative.
Contributions of Components
Of the WTI's seven components, the five positive contributors to the final 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™ 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™ will be released on Wednesday, Aug. 15, 2012 (preliminary third quarter)
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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™ reports by e-mail on a regular basis, contact Jerry Walsh, BNA Research & Custom Solutions, 800-372-1033.
SOURCE Bloomberg BNA