Total compensation costs for civilian workers increased less than expected in the first quarter. Excess slack in the labor market continues to contain wage inflation. Benefit costs slowed substantially on the quarter.


Wage Inflation Remains Tame 


Led by a 0.5 percent gain in wages and salaries, total compensation costs increased 0.3 percent in Q1, the slowest gain since Q3 2011. Year-over-year, wages and salaries are up just 1.6 percent, a pace that has been maintained for the past four years. Private wages and salary growth came in at 1.7 percent year-over-year, while government workers saw a more modest 1.0 percent increase.




Increase in Benefit Costs Slow


Following a gain of 0.6 percent in the prior three quarters, private industry benefit costs contracted 0.3 percent in Q1. An error in benefits data for private sales & office occupations was identified and removed for the Q1 calculation. ? Given our outlook of modest GDP growth and a gradually improving labor market, upward pressure on employee compensation is expected to remain rather modest in 2013