US employment costs increased 0.4 percent in 3rd quarter


United States, 30th October: There has been an increase of 0.4 percent in the employment costs in the third quarter providing a clue for limited inflation in the times ahead.
 

United States, 30th October: There has been an increase of 0.4 percent in the employment costs in the third quarter providing a clue for limited inflation in the times ahead.

As per the data by Labor Department, the 0.4 percent rise in the employment cost index has been the minimum this year. Several economists had forecast an increase of at least 0.5 percent in employment cost index.

And this means that the US economy developed at a relatively faster rate over the summer with more Americans splurging money freely on purchases.

The US economy grew at an annual rate of 2 percent in the quarter of July-September registering a significant improvement over the growth rate of 1.7 percent in the April-June quarter. Nonetheless, the US economy is still a far cry from a stronger growth rate to bring the soaring rates of joblessness in the nation.

Moreover, the high rate of joblessness in the US after the global recession is still controlling bargaining power of workers.

The compensations of both the government and the private industry workers had been the weakest since the process of record keeping began around 28 years ago.

The increase of 1.9 percent in the civilian workers’ compensation showed almost insignificant change from an increase of 1.8 percent for the year ending in June and such increases are quite less than the 3.3 percent rise for the year ending December 2007 when the economic crisis started.

The total loss of jobs in the US has been around 8 million jobs from December 2007 till December 2009 and this has resulted in lowering the morale of the employees who feel reluctant to ask for higher wages.

Around 70 percent of the worker compensation comprises of salaries and wages while benefits (like employee pensions, health insurance etc.) comprise 30 percent of the compensation.

There has been an increase of 0.4 percent in the salaries and wages of civilian employees whereas benefits went up by 0.5 percent.

The rate of joblessness in the US is likely to remain hovering around 9 percent. Hence, Federal Reserve policy is going to focus on increasing additional stimulus to give the much needed boost to US economy and prices.