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Pay and benefits for American workers are rising at the fastest pace in nearly a decade, but not enough to stoke unwanted inflation.
The numbers: Pay and benefits for American workers advanced at a brisk pace in the first three months of 2019, fresh government figures showed, but they still growing less than 3% a year and not rising fast enough to stoke much inflation.
The employment cost index climbed 0.7% in the first quarter, the government said Tuesday, matching the MarketWatch forecast of economists. The ECI reflects how much companies, governments and nonprofit institutions pay employees in wages and benefits.
The increase in compensation slipped to 2.8% in the first quarter from a 10-year high of 2.9% in the final three months of 2018.
What happened: Wages advanced 0.7% in the first quarter. They make up about 70% of employment costs.
Benefits also rose 0.7%. They make up the rest of worker compensation.
Health-care costs for businesses have been relatively restrained in the past year, rising just 1.9%.
Among different workers, increases in compensation ranged from 2.2% for those in manufacturing to 4.8% for employees in information services such as media, public relations and entertainment.
Compensation for government workers increased 3% in the past 12 months, a touch better compared to private-sector employees. More of the increase was tied to higher benefits instead of wages, however.
Read: Consumer spending surges in March, but inflation remains tame
Big picture: The lowest unemployment rate and fewest layoffs in a decade has spawned a labor market so tight that companies have to offer better pay and benefits to retain or attract employees. Yet companies are still managing costs tightly, and compensation isn’t rising fast enough to stoke inflation or threaten a 10-year-old economic expansion.
Read: Jobs report primed to show a rekindled economy, but not a sizzling one
Market reaction: The Dow Jones Industrial Average DJIA, +0.03% and S&P 500 SPX, -0.22% were narrowly mixed in Tuesday trades. The 10-year Treasury yield TMUBMUSD10Y, +0.07% was little changed at 2.53%.
