Employment cost increases by the most since series started in 2001

• Q3 employment cost index: +1.3% vs. consensus of +0.9% and +0.7% prior, marking the strongest print since the series started in 2001.
• The jump indicates that "workers hold a degree of bargaining power unseen in decades" and that inflation is broadening across industries, writes Wells Fargo Economist Sarah House in a note.
• "While we expect wage growth to slow over the second half of 2022, as more workers return to the jobs market, the near-term pressure on labor costs will keep inflation elevated over the next few quarters and make it difficult to settle back to the Fed's 2% target anytime soon," she said.
• Q3 compensation costs for private industry workers jumped 4.1% from a year ago, with an increase of 2.4% in September; wages and salaries rose 4.6% Y/Y in Q3 and 2.7% in September.
• That jibes with Amazon's warning that elevated costs, including increased wage expenses, will dog Q4 results.
• Inflation is also weighing on consumer sentiment even as income expectations rise.