ARLINGTON, Va., Nov. 16, 2011 /PRNewswire-USNewswire/ -- Annual wage increases for workers in the private sector should move modestly higher in early 2012, according to the preliminary fourth quarter Wage Trend Indicator™ (WTI) released today by BNA, a leading publisher of specialized news and information.
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The WTI rose to 98.41 (second quarter 1976 = 100) from 98.36 in the third quarter. If confirmed by the revised and final fourth quarter readings, the increase would be the sixth in as many quarters.
"The latest WTI is signaling that improvements in the labor markets will put upward pressure on wages in the coming months," economist Kathryn Kobe, a consultant who maintains and helped develop BNA's WTI database, said. "Right now, we've still got mixed economic news and an extra layer of uncertainty because of the European debt turmoil," Kobe added.
Despite the anticipated pickup in wage growth, annual gains for private sector workers as a whole are not expected to exceed 2.0 percent. In the third quarter, the most recent data available show wages and salaries grew 1.7 percent year-over-year, as measured by the Department of Labor's employment cost index (ECI).
Reflecting recent labor market conditions, three of the WTI's seven components made positive contributions to the preliminary fourth quarter reading, while three factors were negative and one was neutral.
Over its history, the WTI has predicted a turning point in wage trends six to nine months before the trends are apparent in the ECI. A sustained decline in the WTI is predictive of a deceleration in the rate of private sector wage increases, while a sustained increase forecasts greater pressure to raise wages.
Contributions of Components
Of the WTI's seven components, the three positive contributors to the preliminary fourth quarter reading were job losers as a share of the labor force, reported by DOL; forecasters' expectations for the rate of inflation, compiled by the Federal Reserve Bank of Philadelphia; and the share of employers planning to hire production and service workers in the coming months, tracked by BNA's quarterly employment outlook survey. The negative factors were the unemployment rate and average hourly earnings of production and nonsupervisory workers, both reported by DOL, and industrial production, measured by the Federal Reserve Board. The neutral factor was the proportion of employers reporting difficulty in filling professional and technical jobs, from BNA's quarterly employment outlook survey.
BNA's Wage Trend Indicator™ is designed to serve as a yardstick for employers, analysts, and policymakers to identify turning points in private sector wage patterns. It also provides timely information for business and human resource analysts and executives as they plan for year-to-year changes in compensation costs.
The WTI is released in 12 monthly reports per year showing the preliminary, revised, and final readings for each quarter, based on newly emerging economic data.
More information on the Wage Trend Indicator is available on BNA's WTI home page at http://www.wagetrendindicator.com.
The next report of the Wage Trend Indicator™ will be released on Tuesday, December 13, 2011 (revised fourth quarter).
BNA, a wholly-owned subsidiary of Bloomberg L.P., is a leading source of legal, regulatory, and business information for professionals. BNA analysts produce more than 350 news and information products, including the highly respected Daily Labor Report, U.S. Law Week, and Daily Report for Executives.
Dr. Joel Popkin, who developed the WTI for BNA, is acknowledged as one of the country's foremost authorities on the measurement and analysis of wages and prices. Formerly an official with the Bureau of Labor Statistics, Dr. Popkin has been an analyst observing and predicting the U.S. economic outlook for 40 years. Kathryn Kobe, who worked with Popkin in designing the indicator for BNA, is director of price, wage, and productivity analysis at Economic Consulting Services LLC.
To obtain Wage Trend Indicator™ reports by e-mail on a regular basis, contact Jerry Walsh, BNA PLUS, 800-372-1033.
SOURCE BNA
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