Employment Cost Index QoQ (Q3)

If it comes in above expectations If quarterly growth exceeds 0.8%, employers' wage and benefit costs rose faster than expected. Labor-intensive businesses would need higher prices, better productivity or savings elsewhere to offset the pressure, and concern about labor costs feeding inflation would be harder to dismiss. Beating the estimate would not necessarily mean acceleration from the previous reading.^[1]

If it comes in below expectations If quarterly growth is below 0.8%, employers faced less compensation-cost pressure than expected. Businesses may have less need to raise prices, and the Fed would gain evidence against further tightening. Employees would also receive less growth in wages and benefits.^[1]

Restaurants, retailers and other labor-heavy service companies would feel the profit effects first. Lower cost growth could ease margin pressure and improve the interest-rate outlook for property and indebted companies; higher growth could squeeze them unless selling prices or productivity keep pace. Wage gains also support customers' spending, so slower compensation growth is not an unqualified benefit for every business. Watch the wage and benefit components and whether companies can offset costs through efficiency.^[1]