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Wage growth likely to pick up in latter half of 2014

December 17 2013

Annual wage increases in the U.S. private sector will likely pick up in the latter half of next year, according to the revised fourth-quarter wage trend indicator released today by Bloomberg BNA, a publisher of specialized news and information.

The index now stands at 98.78 (second quarter 1976 = 100), up from the third-quarter reading of 98.70. This marks the first increase since the first quarter of 2013 and follows two quarters of essentially no change. Over the past two and a half years, the forward-looking indicator had fluctuated within a narrow range from 98.47 to 98.75, showing no clear upward or downward trend.

“We are beginning to see some improvements in the labor market, with the unemployment rate falling to 7 percent in November,” said economist Kathryn Kobe, a consultant to BNA. “Continued improvement likely would provide a small boost to workers' annual wage increases in the second half of 2014.”

Kobe expects year-over-year gains in private sector wages to rise to 2.0 percent, or slightly higher, from the 1.8 percent increase reported by the Department of Labor's employment cost index for the 12 months ended in the third quarter.

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