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To: Les H who wrote (57210)	7/27/2000 8:45:35 AM
From: Les H	Respond to of 99985

Citigroup and AMAX Gold sandspring.com

To: Les H who wrote (57210)	7/27/2000 8:46:05 AM
From: UnBelievable	Read Replies (1) \| Respond to of 99985

US 2Q Employment Cost Index +1.0%; Consensus +1.0% DJ US 2Q Employment Cost Index +4.4% From Year Ago DJ Data Snap: Bonuses Have Unclear Impact On 2Q Labor Costs =========================================================== Employment Cost Index !Surprise: No ! 2Q 1Q !Trend:Mild ! ECI 1.0% 1.4% !Inflation ! Benefit Costs 1.1% 2.0% !Consensus: ! Wages & Salaries 1.0% 1.1% ! ECI 1.0% ! =========================================================== By Henry J. Pulizzi and Joseph Rebello WASHINGTON (Dow Jones)--The cost of hiring and keeping workers moderated in the second quarter, providing a measure of relief for policymakers who feared a repeat of the first quarter's sharp inflationary rise. The Labor Department said Thursday that the Employment Cost Index increased 1.0% in the second quarter, down from a 1.4% surge in the first three months of the year. For the first time, the index included hiring and referral bonuses, although the Labor Department said it couldn't estimate how much that changed the second quarter data. Though the pace of overall compensation gains cooled, financial markets, which expected a 1.0% ECI advance, probably won't react strongly to the news. That's because the data do little to alter the Federal Reserve's August debate on interest rates. In Congressional testimony this week, Alan Greenspan suggested he believes the economy may have slowed enough to avoid another interest rate hike, but admitted the decision will depend on the latest economic figures. "There is an awful lot of information about what is happening - and what is likely to happen - which will occur between now and our scheduled meeting," Greenspan told the the House Banking Committee on Tuesday. The information, he said, "will have a significant effect" on any action the Fed's policymaking Open Market Committee chooses to take at its Aug. 22 meeting. Futures contracts currently show that investors believe there's just a 30% chance the central bank will raise its key funds rate by a quarter percentage point. Analysts said the ECI figures are unlikely to change that view. "It would be difficult to price in a friendlier Fed than the market already has, especially with a slew of crucial July numbers due out the week after the ECI," said analysts at Wrightson Associates, referring to coming data on gross domestic product, non-farm payrolls and consumer spending. Still, the Fed may not be entirely reassured by the ECI gain, the latest economic indicator to suggest that inflation pressures may be creeping higher. So far this year, consumer prices excluding food and energy have risen 2.6%, compared with 1.9% for all of 1999. And the ECI was up 4.4% in annual terms in June, the highest year-over-year rate in nine years. In estimating second-quarter labor costs, the Department said it counted Christmas bonuses, contract signing bonuses and profit sharing bonuses because such payments have become more common as the labor market has tightened in recent years. Even so, the department said it found that the bonuses still aren't widespread. It estimated that they added no more than one cent per hour to labor costs in the first quarter. "In the March 2000 data, only 9% of civilian workers had access to a referral, hiring or retention bonus plan," the department said in a statement. "Eighty-five percent did not have access to any of these bonus plans." Moreover, of those workers that had access, few "actually received a bonus during the quarter surveyed." Benefit costs rose 1.1% in the second quarter, following a strong 2.0% boost from January through March. Those costs make up 30% of the entire index. In the private sector, benefit costs also moderated, cooling to a 1.2% gain from the first quarter's 2.3% rise. State and local government benefit costs rose at a 0.5% pace in the second quarter, half the pace of the first quarter. Wages and salaries for all workers rose 1.0% from April through June, down from 1.1% in the first quarter. Private sector wages and salaries rose 1.0% after growing 1.2% in the first three months of the year. In the finance, insurance and real estate sector, wages and salaries slowed noticably, cooling to a 0.5% gain in the second quarter after rising 2.4% in the first quarter. -Henry J. Pulizzi and Joseph Rebello; Dow Jones Newswires; 202-862-9255 (END) DOW JONES NEWS 07-27-00