- Richard Curtin, director of the Michigan Survey of Consumers
US labour costs rose at the slowest pace in 33 years in the second quarter on lacklustre gains in the private sector, putting a September interest rate increase into question. US workers' compensation rose a mere 0.2% in the April-June period, below economists' forecast for a 0.6% gain, and following the 0.7% increase in the first quarter. In annual terms, the employment cost index climbed 2%, compared with 2.6% recorded in the preceding three-month period. The Fed is closely watching wage figures as it moves closer to lifting interest rates from near-zero An acceleration in wages would signal the labour market is finally close to healthy, and could urge the Fed to act sooner rather than later to avoid an overheating economy. However, the latest slowdown suggests slack remains in the jobs market and could bolster the case for officials to wait longer to raise rates.
A separate report showed that US consumer morale declined in July as Americans' expectations worsened to the lowest level in eight months. According to the University of Michigan, the final index of consumer sentiment dropped to 93.1, down from 96.1 in June. Nevertheless, the barometer has held above 90 fro the eight consecutive months, the longest such streak since a 17-month period ended in early 2005.
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