Private-sector workers are likely to experience little or no change in the pace of annual wage growth in the near months, according to the final first-quarter Wage Trend Indicator released by Bloomberg BNA.
The data figure fell to 98.42 from 98.56 in the fourth quarter of 2011, marking the first decrease in nearly two years.
"We are still seeing slow improvements in the labor market, but the outlook for wage growth, for the moment, has hit a plateau," says economist Kathryn Kobe, a consultant who maintains and helped develop Bloomberg BNA's WTI database. "Especially for new employees starting out, wages are being depressed a little bit because of the large pool of unemployed workers."
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Since this survey was first conducted, the WTI has predicted a turning point in wage trends between six and nine months before the trends became apparent in the Department of Labor's employment cost index. A continued drop in the WTI could indicate a deceleration in the rate of private-sector wage increases while a sustained increase could suggest greater pressure to raise wages.
Based on the recent economic conditions, five of the study's seven components are negative in the final first-quarter reading, and only two factors are positive.
Among the study's seven components, the five negative contributors are forecasters' expectations for the inflation rate, compiled by the Federal Reserve Bank of Philadelphia; industrial production, calculated by the Federal Reserve Board; average hourly earnings of production and nonsupervisory workers, reported by DOL; and the share of employers anticipating to hire production and service workers in the near months as well as the proportion of employers finding troubles filling professional and technical jobs, both tracked by Bloomberg BNA's quarterly employment outlook survey. The positive factors were job losers as a share of the labor force and the unemployment rate, both reported by DOL.
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