July 18, 2012 2:24 am
The index rose to 98.67 (second quarter 1976 = 100) from 98.42 in the first quarter.
"The latest WTI indicates the pace of wage growth will strengthen but probably not dramatically so," economist Kathryn Kobe, a consultant who maintains and helped develop Bloomberg BNA's WTI database, said. "We're still seeing mixed signals in the labor market, with small, steady job gains," 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 annual wage gains overall in the private sector to reach 2.0 percent or more, compared with a 1.9 percent year-over-year increase in the first quarter, as measured by the ECI. The WTI does not forecast the magnitude of wage growth, only the direction.
Reflecting recent economic conditions, five of the WTI's seven components made positive contributions to the final second quarter reading, while two factors were negative.
Of the WTI's seven components, the five positive contributors to the final second quarter reading 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 and average hourly earnings of production and nonsupervisory workers, both 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 tracked by Bloomberg BNA's quarterly employment outlook survey. The negative factors were industrial production, measured by the Federal Reserve Board, and the unemployment rate, reported by DOL.
Source: Bloomberg BNA
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