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Wage growth hits a record low

Myles Udland
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(Reuters/STR New)
Wage growth just hit a record low.

Wages grew by 0.2% in the second quarter, according to the latest employment cost index, released Friday by the Bureau of Labor Statistics.

This is the smallest quarterly gain since 1982, when the series began.

Expectations were for the report to show wages tick up 0.6% in the second quarter after a 0.7% rise in the first quarter.

Over last year, the ECI rose 2% after a 2.6% gain in the first quarter. Economists were looking for a year-over-year gain closer to 2.4%.

In a note to clients after the report, Laura Rosner at BNP Paribas wrote that the first quarter's ECI report most likely overstated gains, while Friday's report is probably an understatement. Rosner wrote that this report "could increase uncertainty about the trajectory of wage growth and dampen expectations for a September hike."

This is the final ECI report before the September Fed meeting, and so this report was expected to take on added significance as the Fed weighs whether to raise interest rates for the first time in nine years.

And so with a big a disappointment in Friday's report, the Fed could be persuaded to keep rates pegged near 0% as wage pressures and inflation still appear to be elusive.

Via Bloomberg's Joe Weisenthal, here's the record-low quarter-over-quarter gain.


And the year-over-year disappointment.



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