WASHINGTON (11/3/14)--Wage and salary growth in the third quarter jumped 0.8%, according to numbers reported by the Bureau of Labor Statistics Friday, outgaining the second quarter's performance and perhaps signaling an ever-strengthening labor market (Economy.com Oct. 31).
In addition to accelerating wage and salary growth, benefits also climbed in the third quarter by 0.6%.
Annually, wage and salary growth increased to 2.1% from 1.8% in the third quarter, with private industry wages advancing 2.3% and government wages climbing 1.6% over that stretch.
With employer costs rising 0.7% overall in the quarter, the overall employment cost index posted a 2.2% year-over-year increase, its fastest pace since 2008.
"This marks the first time since 2008 that a 0.7% pace (in compensation) was maintained over two consecutive quarters," said Andrew Davis, Moody's analyst (Economy.com). "After prolonged weakness from late 2009 through 2010, compensation growth appears to be accelerating as the labor market slowly tightens."
Meanwhile, the Bureau of Economic Analysis reported Friday that consumer spending fell 0.2% in September after a 0.5% increase in August.
A drop in vehicle sales fueled the step-back, according to Moody's, and nondurable goods spending also fell.
"Spending growth will accelerate as more rapid economic gains lift job and income growth and, therefore, confidence," said Scott Hoyt, Moody's analyst (Economy.com). Hoyt said that lower energy prices, driven by plunging oil prices, should support an increase in real spending as well.
Further, consumer prices climbed 0.1% in September after dropping by 0.1% in August, pushing prices 1.4% above their year-ago levels.
The savings rate also rose to 5.6%, matching its highest rate since 2012.