Employment Cost Index (Q2)

The further slowdown in wage growth evident in the second-quarter employment cost index data won’t be enough to prompt a surprise rate cut from the Fed later today, but it does strengthen the case for loosening policy in September. ECI economy-wide compensation increased by a slightly more muted 0.91% q/q in the second quarter, with the annual growth rate edging down to 4.1%, from 4.2%. Even more encouragingly, ECI private wages & salaries – our preferred measure – increased by a 4-year low of only 0.84% q/q (or 3.4% annualised) and the annual growth rate slowed more markedly to 4.0%, from 4.3%.