Disappointing Employment Cost Index Could Hurt Dollar

US recently saw a major release as the Employment Cost Index (ECI) was released by US Bureau of Labour Statistics.

The forecast was positioned for an increase of 0.6% in the U.S. Worker Pay, but the outcome was very disappointing, as the ECI rose 0.2% in the second quarter of 2015.

According to reports, it was the slowest increase on record.

Employment Cost Index (ECI)

This past week, there was a major economic release lined up in the US. The US Employment Cost Index (ECI), which is a quarterly measure of the change in the price of labor was released by US Bureau of Labour Statistics. The expectation was high, as the market was positioned for an increase of 0.6% in the second quarter of 2015, which was already on the lower side when compared with the last gain of 0.7%.

The outcome missed the mark, as the US Employment Cost Index rose by only 0.2% in the second quarter of 2015 on the seasonally adjusted basis. The report stated that “Wages and salaries (which make up about 70 percent of compensation costs) was also little changed at 0.2 percent, and benefits (which make up the remaining 30 percent of compensation) was little changed at 0.1 percent”.

Compensation costs for civilian workers

According to the report, the compensation costs for civilian workers increased by 0.2% in June 2015, compared with the same month of the preceding year. Similarly, wages and salaries rose 2.1%.

Compensation costs for private workers

The compensation costs for the private industry workers increased by 1.9% in June 2015, compared with the same month of the preceding year. Similarly, wages and salaries rose 2.2%.

Overall, the outcome was on the lower side, as the Fed members are relying heavily on rising wages to boost the economy. So, moving ahead it would be interesting to see how the US Dollar trades and whether sellers see this as an opportunity to take the greenback lower.

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