Employment Cost Index - ECI

AAA

DEFINITION of 'Employment Cost Index - ECI'

A quarterly report from the U.S. Department of Labor that measures the growth of employee compensation (wages and benefits). The index is based on a survey of employer payrolls in the final month of each quarter. The ECI tracks movement in the cost of labor, including wages, fringe benefits and bonuses for employees at all levels of a company.

INVESTOPEDIA EXPLAINS 'Employment Cost Index - ECI'

The idea behind analyzing ECI is that as wage pressures increase, so does inflation because compensation tends to increase before companies increase prices for consumers. Thus, it is considered inflationary when the ECI has an increasing trend or exhibits a jump that is higher than expected for a given period. In addition, as inflation increases, yields and interest rates also rise, resulting in a decrease in bond prices.

RELATED TERMS
  1. Blue Collar

    A working-class person historically defined by hourly rates of ...
  2. White Collar

    A working class that is known for earning high average salaries ...
  3. Yield

    The income return on an investment. This refers to the interest ...
  4. Yield Curve

    A line that plots the interest rates, at a set point in time, ...
  5. Consumer Price Index - CPI

    A measure that examines the weighted average of prices of a basket ...
  6. Inflation

    The rate at which the general level of prices for goods and services ...
Related Articles
  1. Bonds & Fixed Income

    Advanced Bond Concepts

    Learn the complex concepts and calculations for trading bonds including bond pricing, yield, term structure of interest rates and duration.
  2. Economics

    The Economics Of Labor Mobility

    Loosening labor restrictions has both good and bad effects for a country and its workers.
  3. Options & Futures

    Using LEAPS With Collars

    This options strategy will help you lock in profit while keeping your upside potential.
  4. Investing Basics

    Equity Investing For The Buy-And-Holder

    The buy-and-hold investment strategy requires investors to disregard their emotional responses to market movements.
  5. Investing Basics

    3 Reasons Why You Need To Understand Investing

    Everyone should learn a few investing basics, even if you plan to hire an investment professional.
  6. Mutual Funds & ETFs

    Mutual Funds Vs. ETFs: Small Cap Stocks

    For individual investors, a passive strategy may be best when investing in the small-cap realm of equities.
  7. Mutual Funds & ETFs

    All Weather Investing With ETFs

    All Weather investment strategies can shield investors during the worst bear markets.
  8. Mutual Funds & ETFs

    Using ETFs For Small Periodic Investments

    ETFs have lower costs than index funds, but the cost to buy and sell can be more expensive.
  9. Mutual Funds & ETFs

    A Brief History Of Exchange-Traded Funds

    Learn how ETFs have become the most popular investment vehicle in less than 20 years.
  10. Options & Futures

    The Benefits Of ETF Investing

    Exchange-traded funds provide unique opportunities for investors. Find out how.

You May Also Like

Hot Definitions
  1. Commodity

    1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often ...
  2. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  3. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  4. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  5. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  6. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
Trading Center