WTI Forecasts Steady Pace for Annual Pay Increases
ARLINGTON, Va., April 16, 2013 /PRNewswire-USNewswire/ -- Annual wage increases for private sector workers likely will remain close to their recent pace in the months ahead, according to the final first quarter Wage Trend Indicator™ (WTI) released today by Bloomberg BNA, a leading publisher of specialized news and information.
The index rose to 98.73 (second quarter 1976 = 100) in the first three months of 2013 from 98.52 in the fourth quarter of 2012. Over the past seven quarters, the WTI has fluctuated, staying within a range of 98.47 to 98.75.
"Labor market indicators recently have been very mixed," economist Kathryn Kobe, a consultant who maintains and helped develop Bloomberg BNA's WTI database, said. "We're not seeing the robust growth in the economy that's needed to boost wages," Kobe said.
Kobe said she expects little or no change in the pace of annual wage gains in the private sector from the 1.7 percent increase in 2012, as measured by the Department of Labor's employment cost index (ECI). The WTI does not forecast the magnitude of wage growth, only the direction.
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 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.
Reflecting mixed economic conditions, four of the WTI's seven components made positive contributions to the final first quarter reading, while three factors were negative.
Contributions of Components
Among the WTI's seven components, the four positive contributors to the final first quarter reading were the share of employers reporting difficulty in filling professional and technical jobs, measured by Bloomberg BNA's quarterly employment outlook survey; average hourly earnings of production and nonsupervisory workers and the unemployment rate, both from DOL; and industrial production, reported by the Federal Reserve Board. The three negative factors 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, from DOL; and the share of employers planning to hire production and service workers in the coming months, also from Bloomberg BNA's employment survey.
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, May 15, 2013 (preliminary second 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