Strong US employment costs boost labour sector

US personal income in March increased 0.40%, above expectations of a 0.30% increase. However, the important employment cost index or ECI increased 0.60% in the first quarter with the wages and salaries sub-component rising 0.70%, market the strongest quarterly gains in over a year. Wages in the private sector were also up 2.50%.


The uptrend in the wages is consistent with the US labor market approaching full employment and indicates that domestic developments in the US are likely to remain robust, which could see the Fed shift to its rate hike cycle sooner than later. While the ISM manufacturing data due later today will be important, focus will clearly remain on this Friday's non-farm payrolls report, which could see another month of strong gains in the US labor markets.