Employment Cost Index (ECI)

Source: Department of Labor

Frequency: Quarterly

Availability: Three to four weeks following the reported quarter

Possible Impact on Interest Rates: Larger-than-expected increase or increasing trend is considered inflationary, causing bond prices to drop and yields and interest rates to rise.

Overview: The Employment Cost Index (ECI) measures the growth of compensation (wages and benefits). The index is based on a fixed group of occupations.

The ECI is not particularly timely as it is published quarterly. However, it is considered to be an excellent indicator of compensation trends--superior to the earnings data included in the monthly employment report, as the ECI considers changes in benefits costs as well as compensation.

A strong report is bad news for the bond market, causing the bond to slump. Likewise, a weak report is viewed positively by investors.