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Wage Growth Expected To Show Little Movement, WTI Says

ARLINGTON, Va., Feb. 20, 2013 /PRNewswire-USNewswire/ --The rate of annual wage growth for private sector workers is expected to show little, if any, change in the coming months, according to the preliminary first quarter Wage Trend Indicator™ (WTI) released today by Bloomberg BNA, a leading publisher of specialized news and information.

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The latest index stands at 98.63 (second quarter 1976 = 100), up from 98.52 in the fourth quarter of 2012. Over the past seven quarters, the WTI has fluctuated within a narrow range from 98.47 to 98.75.

"Labor market conditions overall have been improving slowly, but the economy remains somewhat weak," economist Kathryn Kobe, a consultant who maintains and helped develop Bloomberg BNA's WTI database, said. "Although the fiscal cliff has been avoided, there's still a lot of uncertainty about the economic impact of a possible federal budget sequester, and businesses appear hesitant to hire new employees," Kobe said.

Kobe said she expects little or no change in the pace of annual wage gains in the private sector from the 1.7 percent increase over the year ended in the fourth quarter, as measured by the Department of Labor's employment cost index (ECI). The WTI does not forecast the magnitude of wage growth, only the direction.

Over its history, the WTI has predicted a turning point in wage trends six to nine months before the trends are apparent in the ECI. A sustained increase in the WTI forecasts greater pressure to raise private sector wages, while a sustained decline is predictive of a deceleration in the rate of wage increases.

Reflecting mixed economic conditions, three of the WTI's seven components made negative contributions to the final fourth quarter reading, while three factors were positive and one was neutral.

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