Two closely watched inflation gauges showed limited relief for the US economy from runaway price growth, keeping the Federal Reserve on track to continue its historically aggressive monetary tightening next week.
The latest Employment Cost Index (ECI) report, which tracks employers’ payroll expenditures, showed total compensation for civilian workers in the third quarter rose 1.2%, the Bureau said on Friday. of Labor Statistics. That was in line with economists’ forecasts and down from 1.3% in the three months to June 30.
The data is of great interest to policymakers and economic watchers, as strong wage growth, stemming from a robust domestic labor market, is among the factors keeping headline inflation near highs. historical.
A potential sign of some easing of pressures, wage growth for private sector workers slowed to 1.1% in the third quarter from 1.5% in the prior period.
Separately, the core personal consumption expenditure (PCE) index rose 0.5% in September, bringing its annualized rate to 5.1%, the US Commerce Department said on Friday. The base figure excludes volatile food and energy costs and is the Fed’s preferred measure of inflation.
This monthly increase was in line with economists’ expectations, although the annualized core PCE was forecast at 5.2%.
The core PCE remained well above the Fed’s 2% inflation target, bolstering the case for policymakers to implement a 0.75 percentage point rate hike on Wednesday at the outcome of their two-day meeting of the Federal Open Markets Committee.
Overall PCE, which includes food and energy, rose 0.3%, holding at an annualized rate of 6.2%.
Economists and investors are wondering when the Fed might consider slowing the pace of interest rate hikes.
Some Fed officials have suggested the central bank should start bracing for a slower pace of interest rate hikes, leaving economists and investors on the lookout for signs of possible timing. But the wage and PCE figures, coupled with data from earlier this month that showed US consumer prices remain high, make such a policy shift unlikely anytime soon.