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Wage growth likely to pick up later this year

January 17 2014

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

The index now stands at 98.82 (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.

“Some labor market indicators continued to improve in December, despite the weak payroll job gain reported for the month,” said economist Kathryn Kobe, a consultant to BNA. Declines in the unemployment rate and in job losers as a share of the labor force last month contributed to the gain in the final fourth-quarter WTI, she said.

Kobe expects year-over-year gains in private sector wages to rise to 2.0 percent, or slightly higher, up 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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