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Private Sector Wages to Rise

March 16 2011

Private sector workers will see annual wage increases of close to 2.0 percent in the coming months, according to the revised first quarter wage trend indicator released today by the BNA, a publisher of specialized news and information.

The indicator level stands at 97.99 (1976 = 100) in the first quarter, up from 97.42 in the fourth quarter of 2010, the third consecutive gain in the forward-looking indicator.

"For the most part, the employment situation has stabilized and is getting a little stronger," said economist Kathryn Kobe, a consultant who maintains and helped develop BNA's wage trend indicator database. "The latest WTI reading shows some upward pressure on wages is expected to follow," Kobe said.

Wages grew 1.8 percent in 2010, according to the Department of Labor's employment cost index (ECI), up from a 1.3 percent increase in 2009. The wage trend indicator tends to predict wage trends six to nine months before the trends are apparent in the employment cost index.

A sustained decline in the wage trend indicator is predictive of a deceleration in the rate of private sector wage increases, while a sustained increase forecasts greater pressure to raise wages.

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