Newspaper article THE JOURNAL RECORD

Employment Costs Index Falls to 3.2%

Newspaper article THE JOURNAL RECORD

Employment Costs Index Falls to 3.2%

Article excerpt

WASHINGTON (AP) _ Slower growth in health insurance and other job benefits helped hold workers' overall compensation gains to the smallest on record in the year ended March 31.

The Labor Department said Tuesday its Employment Cost Index rose 3.2 percent for the 12 months, down from 3.5 percent a year earlier and the tiniest increase since the government began tracking wages, salaries and benefits in 1982.

The index is considered one of the best gauges of wage inflation pressures. And since employment costs represent about two-thirds of a product's cost, it suggested price hikes will be held in check in the near future.

"But it's a two-edged sword," said economist Robert G. Dederick of the Northern Trust Co. in Chicago. "While it's reassuring on the inflation side, it shows wages are just keeping up with inflation. There's no increase in purchasing power."

"It's a wonder people feel so good," Dederick said, alluding to a survey released Tuesday showing that consumer confidence jumped in April to its highest level in nearly four years.

"I suppose they're more confident about their job situation. They're not getting paid much, but they have a job," he added.

The Conference Board, a New York-based research group, said its index of consumer confidence rose five points in April to 91.7. The index is now at the highest level since a 101.7 reading in July 1990.

"Basically, it finds consumers are believers in the expansion," Dederick said.

Analysts believe the increased confidence will translate into continued consumer spending, which represents about two-thirds of the nation's economic activity.

The Employment Cost Index showed wages and salaries _ 72 percent of total compensation _ rose 2.9 percent in the year ended in March, slightly more than the 2.7 percent advance a year earlier.

But they were barely keeping up with inflation. …

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