The quarterly increase in US wages was just 0.2% – a third of the 0.6% rise expected – and a meager 2% increase Y/Y in line with all the other depressed BLS data, which dashes the “wage growth is looming” meme and crushed the 0.7% rise in Q1 that had so many hopeful of escape velocity any day now.

Because the ECI tracks the same job over time, it removes shifts in the mix of workers across industries, which is a shortcoming of the hourly earnings figures, which makes this number even more of a disaster. This is the weakest US wage growth since records began in 1982 and half as slow as the weakest of 57 economist estimates.

As Bloomberg notes,

Fed officials are “still looking at a lot of slack remaining in the job market,” Scott Brown, chief economist at Raymond James Financial Inc. in St. Petersburg, Florida, said before the report. “If the numbers sort of fall back a bit, that might push the Fed toward a later rate increase than September.”

The median forecast of 57 economists surveyed projected a 0.6 percent increase for the total ECI index. Last quarter's reading was lower than all estimates, which ranged from increases of 0.4 percent to 0.8 percent. The gauge measures employer-paid taxes such as Social security and Medicare in addition to the costs of wages and benefits.

This was lower than the lowest economist estimates:

But… but… they promised…

As Valentin Marinov of credit Agricole previewed:

Today's US data could be quite important as well with market focus likely to be on the Employment Cost Index (ECI) – easily the most comprehensive measure of wages in the economy.

Evidence of further ECI growth would be consistent with mounting wage pressures against the background of subdued trend economic growth and dissipating slack in the labor market. In turn, it would strengthen the case for lift-off sooner rather than later. USD could extend its gains broadly with markets also positioning ahead of the all-important NFP release next week.