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First Cut: First quarter employment costs on trend, impacts from COVID-19 were minimal

The first quarter Employment Cost Index (ECI) was up 0.8% from the fourth quarter 2019 and up 2.8% year-over-year. There was no apparent impact from the measures taken to stem the spread of COVID-19. If there were any, they were masked by overall strength in compensation.

The index for wages and salaries (about 2/3 of the total) was up 0.9% quarter-over-quarter and up 3.2% year-over-year. Benefits costs were up 0.4% in the first quarter from the fourth and up 3.1% compared to a year-ago.

Gains in compensation were solid for service providers with the index up 0.9% quarter-over-quarter. In particular, workers in wholesale saw a 1.2% quarter-over-quarter increase, as did workers in professional and business services.

Workers at goods providers had a more modest 0.5% in compensation, but that number was kept in check by a 1.6% decline in aircraft manufacturing while Boeing production was deeply impacted by shutdowns at 737 MAX facilities.

State and local government compensation was up 0.7% from the prior quarter on gains of 0.8% for public administration and healthcare and social assistance, and by a 0.6% increase in education.

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