Employment Cost Index - ECI

A quarterly report from the U.S. Department of Labor that measures the growth of employees' compensation (wages and benefits). The index is based on a survey of employer payrolls in the final month of each quarter. The ECI tracks movement in the cost of labor, including wages, fringe benefits and bonuses for employees at all levels of a company.

Investopedia Says:
The idea behind analyzing ECI is that as wage pressures increase, so does inflation because compensation tends to increase before companies increase prices for consumers. Thus, it is considered inflationary when the ECI has an increasing trend, or exhibits a jump that is higher than expected for a given period. In addition, as inflation increases, yields and interest rates also rise, resulting in a decrease in bond prices.

Related Links:
The economy has a large impact on the market, so investors should know how to interpret these eleven indicators. Economic Indicators to Know
Learn the complex concepts and calculations for trading bonds including bond pricing, yield, term structure of interest rates and duration. Advanced Bond Concepts
What causes inflation? How does it affect your investments and standard of living? This tutorial has the answers. All About Inflation

Measurement of the changes in labor costs for money wages and salaries and noncash fringe benefits in nonfarm private industry and state and local governments for employees. The statistics are provided on a quarterly basis by the United States Bureau of Labor Statistics.

The most comprehensive and refined measure of underlying trends in employee compensation as a cost of production. Measures the cost of labor and includes changes in wages and salaries and employer costs for employee benefits. ECI tracks wages and bonuses, sick and vacation pay plus benefits such as insurance, pension and Social Security, and unemployment taxes from a survey of 18,300 occupations at 4,500 sample establishments in private industry and 4,200 occupations within about 800 state and local governments. This index can be obtained free from the Bureau of Labor Statistics' Internet site (www.stats.bls.gov). See also Inflation.