The pressure on staff costs is intensifying. The ‘Great Resignation’ pushed the employment cost index up 1.36% q/q (3.75% y/y) in Q3.
Retail trade saw the biggest annual rise, with the ECI up 5.25% y/y.
Amazon saw operating costs jump by $2bn in Q3. Around $1bn of this reflected increased inflation pressures, including higher wages.
Wages & salaries across all sectors were up 1.46% q/q, the biggest quarterly gain since Q1 1984.
At the end of this quarter, the CPI excluding food & energy was rising at annual rate of 5.0%, a percentage point higher than the y/y increase recorded in September this year.
A core inflation rate running at 5.0% would be a jolt, for the FOMC and markets. The pending vaccine-or-test mandate for larger employers will exacerbate labour shortages.
Summary
- Investment in ‘Tech’ soars again
- Amazon’s margins squeezed
- But consumer discretionary stocks outperform on resilient economy
