The US Employment Cost Index is expected to register a 0.6% sequential increase in the first quarter. This is in line with the gain reported in Q4 and appears benign on the surface; however, it will push the yoy growth rate from 2.3% to 2.6%, the strongest pace since 2008. The acceleration should be even more pronounced in the ECI wage & salary component for private sector workers which is expected to show a 0.7% sequential increase and a 2.8% yoy growth rate. This would be the first tangible sign of a pickup in wage growth. While a pickup in wage growth is not a pre-condition for a rate hike by the Fed, it could nonetheless cause the market to reassess the likely timeframe.
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