Wage Gains in Holding Pattern, WTI Shows
ARLINGTON, Va., Sept. 18, 2012 /PRNewswire-USNewswire/ -- Private sector workers likely will see little or no change in annual wage increases in the coming months, according to the revised third quarter Wage Trend Indicator™ (WTI) released today by Bloomberg BNA, a leading publisher of specialized news and information.
The index stood at 98.49 (second quarter 1976 = 100) down from 98.67 in the second quarter. Over the past year, the forward-looking indicator has fluctuated in a narrow range from 98.40 to 98.67.
"The latest reading reflects the general softness of the economy and the lack of robust labor market conditions needed to improve wage growth," economist Kathryn Kobe, a consultant who maintains and helped develop Bloomberg BNA's WTI database, said. "There's a lot of uncertainty around the U.S. election and how and when the federal government plans to remedy the fiscal cliff at the end of the year," 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 little change in annual wage gains overall in the private sector from the 1.8 percent increase over the year ended in the second quarter, as measured by the ECI. The WTI does not forecast the magnitude of wage growth, only the direction.
Reflecting recent economic conditions, six of the WTI's seven components made negative contributions to the revised third quarter reading, while one factor was neutral.
Contributions of Components
Of the WTI's seven components, the five negative contributors to the revised third quarter reading were forecasters' expectations for the rate of inflation, compiled by the Federal Reserve Bank of Philadelphia; the unemployment rate, job losers as a share of the labor force, and average hourly earnings of production and nonsupervisory workers, all 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 from Bloomberg BNA's quarterly employment outlook survey. The neutral factor was industrial production, measured by the Federal Reserve Board.
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 Thursday, Oct. 18, 2012 (final 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