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Is That... Wage Growth?!?!

Shane FerroOct 31, 2014, 22:50 IST

The latest employment cost index report came out from the Bureau of Labor Statistics this morning. Overall compensation increased by increased by 0.7% in Q3, and wages increased by 0.8%. Year-over-year, compensation is up 2.2%, with wages up 2.1%.

This looks like the wage growth that everyone has been looking for after signs the labor market is tightening up.

"The acceleration in wages is not really a surprise given how tight the labor market is, see also all the work we have done on this topic in recent months," Deustche Bank's Torsten Slok said. "The wage acceleration we are seeing tells us that the NAIRU in the US economy is around 5.9%. Fixed income investors should be paying attention to the rising trend in wages because the FOMC will not be ignoring it. In other words, it is time to protect your portfolio against higher rates."