Employment Costs Ease

Quarter-to-quarter cost pressure eased for employers in the fourth quarter but was still substantial at 0.7 percent. The year-on-year pace, however, increased to 2.9 percent from a 2.8 percent rate in the third quarter.

Benefits led the cost increase in the fourth quarter, rising 0.7 percent following uneven increases of 0.4 and 0.9 percent in the third and second quarters. Year-on-year, benefits were up 2.8 percent in the fourth quarter which is 2 tenths higher than the third quarter.

Wage and salary pressure eased 3 tenths from the third quarter to 0.5 percent which compares with 0.9 and 0.5 percent increases in the prior two quarters. But year-on-year, the rate rose 2 tenths and looks heavy at 3.1 percent. This, in fact, is the highest rate since the third quarter of 2008.

This report is mixed showing both deceleration, at least on the quarterly side, but outright acceleration for both benefits and wages on the annual side. To justify a rate hike, Powell said indications of building inflation would be key but today's report is mixed.