Year-to-date through August, payroll employment has increased by about 3½ million jobs, a surprisingly strong increase given the decelerating spending and declining GDP over the first half of the year. The unemployment rate has fallen, on net, from 4 percent in January to 3.7 percent in August.
Possibly the strongest indications that the labor market is tight were the first- and secondquarter readings of the employment cost index (ECI), which point to strong and broadbased growth in total hourly compensation. The 6.3 percent reading for the ECI in the second quarter was the largest annualized quarterly growth in compensation under this metric since 1982.