The ECI grew 1.2% quarter-over-quarter (QoQ) and 4.2% year-over-year (YoY) in Q1 2024, exceeding expectations and matching the previous quarter's growth rate. Private wages and salaries increased 1.1% QoQ and 4.3% YoY, unchanged from the previous quarter. The growth in private wages was broad-based across occupations, with sales experiencing a notable 1.9% QoQ increase. Notably, wages and salaries of state and local governments grew 1.4% QoQ and 5.0% YoY, driven by healthcare services and public administration jobs.

The market responded to the ECI release with yields spiking, and small-cap stocks ($IWM) declining due to the continued pressure of high wages on businesses. The ECI beat was considered significant, especially given the FOMC meeting, and may have continue to put pressure on the Fed to remain hawkish.