The numbers: The U.S. employment cost index rose 1.4% in the first quarter, up from a 1% gain in the October-December quarter, the Labor Department said Friday. Economists polled by the Wall Street Journal had forecast a 1.1% increase.
The increase in compensation gains over the past year rose to 4.5% from 4%.
Key details: Wages for private industry workers accelerated to a 1.3% gain in the first quarter, up from 1.1% in the prior three months. Year-over-year, wages are up 5% in the quarter, the same pace as in the fourth quarter.
Overall wages and salaries rose 1.2% after advancing 1% in the fourth quarter. They make up about 70% of employment costs. Over the past year, wages rose at a 4.7% rate, up from 4.5% in the last quarter of 2021.
Benefits jumped 1.8% in the January-March quarter after a 0.9% gain in the prior quarter . They account for the rest of worker compensation. Year on year- benefits are up 4.1%, much higher than the 2.8% rate in the prior quarter.
Big picture: The acceleration in wages won’t provide any relief for economists worried about “too tight” labor markets, said Richard Moody, chief economist at Regions Financial. Economists view the employment cost index as a best gauge of labor costs. Rising wages and benefits are one of the factors companies say are leading them to raise their prices. Some economists are worried about a wage price spiral that will keep inflation pressures firm, if not rising, from the 40year high of 8.5% annual rate in March.