Private-sector workers are likely to experience steady wage growth in the coming months, according to the final third quarter Wage Trend Indicator released by Bloomberg BNA, a publisher of specialized news and information.
During the second quarter, the index dropped to 98.52 from 98.67 while fluctuating between 98.40 and 98.67.
“Although we’ve seen slow improvement in labor market conditions, we still have major uncertainties facing the economy, most significantly the election and the fiscal cliff,” says Kathryn Kobe, an economist and consultant who maintains and helped develop Bloomberg BNA’s WTI database. “The unsettled political climate increases employers’ uncertainty about their hiring plans.”
Kobe says little or no change in annual wage gains is projected for the private sector from the 1.8 percent tick over the year ended in the second quarter as measured by the Department of Labor’s employment cost index. The WTI only estimates the direction of wage growth, not the extent.
Since the WTI has been around, it has predicted a turning point in wage trends six to nine months before they become clear in the employment cost index. While a sustained increase in the WTI projects more pressure to raise private-sector wages, a sustained decline suggests a deceleration regarding the rate of wage increases.
Among the WTI’s seven components, five made negative contributions to the final third-quarter reading, one factor was position, and one factor was neutral, which reflects recent economic conditions.