Total Compensation QoQ
+0.75% ▲
YoY: +3.41%
The Employment Cost Index (ECI) measures the change in the cost of labor, including wages, salaries, and benefits, paid by employers. It is considered the Federal Reserve's preferred wage measure because it controls for compositional shifts in the workforce. This makes it a more accurate indicator of underlying labor market inflation pressures than other wage metrics.
ECI Components
Core Components
| Component |
Index |
QoQ % |
YoY % |
| Total Compensation (All Civilian) |
174.0 |
+0.75% |
+3.41% |
| Wages & Salaries |
176.2 |
+0.73% |
+3.36% |
| Benefits |
166.9 |
+0.74% |
+3.46% |
| Private Industry Total |
173.5 |
+0.73% |
+3.37% |
Sector Breakdown (QoQ)
| Sector |
Index |
QoQ % |
YoY % |
| Construction |
168.2 |
+0.75% |
+4.00% |
| Government |
176.7 |
+0.82% |
+3.37% |
| Manufacturing |
167.0 |
+0.56% |
+3.13% |
| Services |
187.3 |
+0.95% |
+3.50% |
Total civilian compensation grew by +0.75% quarter-over-quarter for the period ending October 2025, indicating a continued deceleration in labor cost growth. Wages and salaries increased by +0.73%, while benefits saw a slightly higher rise of +0.74%. This data confirms that overall compensation growth is decelerating, aligning with recent trends.
Compensation Regime
Streak
2Q at/below target
The current compensation regime is characterized by a "Normal" pace and a "decelerating" trend. This marks the second consecutive quarter where compensation growth has been at or below the target, suggesting a normalization of cost increases. This trend contrasts with earlier periods of more elevated growth, indicating a cooling labor market.
Historical Parallels
| Quarter | QoQ % | 2Q Later | 4Q Later |
|---|
| 2024 Q4 |
0.90% |
0.94% |
0.75% |
| 2024 Q3 |
0.85% |
0.89% |
0.79% |
| 2024 Q2 |
0.92% |
0.90% |
0.94% |
| 2024 Q1 |
1.05% |
0.85% |
0.89% |
| 2023 Q4 |
0.93% |
0.92% |
0.90% |
Historical analysis reveals 53 similar quarter-over-quarter periods with comparable growth rates. These historical parallels suggest that compensation growth typically continues to moderate in subsequent quarters. On average, two quarters later, the QoQ change was 0.67%, and four quarters later, it was 0.68%, implying a sustained trend of easing labor cost pressures.
Market Snapshot
Note: The ECI is a quarterly, mid-tier indicator. Market moves shown below reflect broad conditions and are not necessarily driven by this release.
Market Snapshot
| Index | Today's Gap |
|---|
| S&P 500 |
-0.60% |
| Nasdaq 100 |
+0.00% |
| Dow Jones |
-0.27% |
| Russell 2000 |
-0.88% |
Top Movers
| Stock | Gap | 1M |
|---|
| TRINZ Trinity Capital Inc. 7.875% Notes due 2029 |
+247.87% |
-71.2% |
| OXLCI Oxford Lane Capital Corp. |
+220.75% |
-68.8% |
| NMFCZ New Mountain Finance Corporation 8.250% Notes due 2028 |
+219.39% |
-68.7% |
| ADAMI Adamas Trust, Inc. |
+194.87% |
-66.1% |
| MFAN MFA Financial, Inc. 8.875% Senior Notes |
+191.87% |
-65.6% |
Bottom Movers
| Stock | Gap | 1M |
|---|
| OLMA Olema Pharmaceuticals, Inc. |
-37.17% |
-18.2% |
| MHLA Maiden Holdings, Ltd. 6.625 NT 2046 |
-14.94% |
+10.5% |
| ORIC ORIC Pharmaceuticals, Inc. |
-13.84% |
+29.2% |
| SLMBP SLM Corporation |
-10.00% |
+0.0% |
| AMPX Amprius Technologies, Inc. |
-9.80% |
+31.7% |
The S&P 500 recently saw a -2.1% decline over the last month, trading at $6740. While the ECI is a significant economic indicator, it is a quarterly, mid-tier release, meaning broader market movements are unlikely to be solely driven by this specific data point. The current market context reflects a range of factors beyond this single labor cost report.
Sector Performance
Sector Performance
| ETF |
Price |
Open Gap |
1M |
6M |
1Y |
YTD |
VS S&P 500 |
| XLV Healthcare |
$152.70 |
+0.05% |
-2.1% |
+12.1% |
+3.8% |
-1.4% |
-0.1% |
| XLP Consumer Staples |
$85.78 |
-1.00% |
-1.4% |
+8.0% |
+6.9% |
+10.4% |
+0.7% |
| XLY Consumer Discretionary |
$114.44 |
-1.30% |
-4.7% |
-2.3% |
+9.2% |
-4.2% |
-2.6% |
| XLI Industrials |
$169.94 |
-1.10% |
+0.3% |
+13.0% |
+28.7% |
+9.6% |
+2.4% |
Labor-Cost-Sensitive Stocks
Labor-Cost-Sensitive Stocks
| Stock |
Price |
Open Gap |
1M |
6M |
1Y |
YTD |
VS S&P 500 |
| AMZN Amazon |
$213.21 |
+0.83% |
-8.5% |
-9.5% |
+2.3% |
-7.6% |
-6.4% |
| COST Costco |
$998.10 |
+0.15% |
+2.0% |
+4.6% |
-4.3% |
+15.7% |
+4.1% |
| WMT Walmart |
$123.80 |
-0.09% |
-3.3% |
+22.7% |
+30.0% |
+11.1% |
-1.2% |
| MCD McDonald's |
$328.06 |
-0.66% |
+1.4% |
+3.5% |
+7.9% |
+7.3% |
+3.4% |
| ELV Elevance Health |
$289.64 |
-1.08% |
-15.0% |
-5.5% |
-26.1% |
-17.4% |
-12.9% |
| PAYX Paychex |
$100.85 |
-1.32% |
+2.4% |
-25.9% |
-32.1% |
-10.1% |
+4.5% |
| UNH UnitedHealth |
$286.48 |
-1.56% |
+3.8% |
-7.1% |
-38.7% |
-13.2% |
+5.9% |
| TGT Target |
$120.79 |
-1.59% |
+5.8% |
+30.3% |
+5.9% |
+23.6% |
+7.9% |
| RHI Robert Half |
$24.76 |
-2.02% |
-24.6% |
-33.7% |
-54.1% |
-8.8% |
-22.5% |
| ADP ADP |
$226.24 |
-2.38% |
-3.6% |
-24.5% |
-26.0% |
-12.0% |
-1.5% |
Decelerating labor cost growth is generally positive for labor-cost-sensitive stocks, as it can alleviate pressure on profit margins. Companies like Walmart (WMT), Amazon (AMZN), McDonald's (MCD), UnitedHealth Group (UNH), ADP, and Paychex (PAYX) could see benefits from this trend. Sector ETFs such as Consumer Staples (XLP), Consumer Discretionary (XLY), and Healthcare (XLV) may experience varied impacts, with XLP and XLY potentially benefiting from reduced wage inflation, while XLV's labor costs are a significant factor.
Positioning
Investors should consider a nuanced approach, potentially favoring labor-intensive sectors that benefit from easing wage pressures, while also maintaining exposure to automation beneficiaries. A continued deceleration in ECI could further support companies with high labor components. A significant re-acceleration in either wages or benefits would signal a shift, prompting a re-evaluation of this positioning.