It was way back in the fourth-quarter of 2007 that the employment cost index last jumped 0.8 percent, as it did in the first quarter. The surge is split nearly evenly between wages & salaries, also up 0.8 percent on the quarter, and benefits, up 0.7 percent. Year-on-year, the ECI was up 2.4 percent for a 2 tenths gain from the fourth quarter in what is the second strongest showing of the 8-year expansion.
Pressure in this report comes at a time when the unemployment rate is very low, at 4.5 percent, and reports are building, including from the Federal Reserve's Beige Book, that labor is in short supply especially skilled labor. This pressure has yet to appear in average hourly earnings or consumer prices but this may only be a question of time. If wage inflation does begin to pick up, we can look back at this report as the first indication.