Consumer Confidence, Workers’ Wages Surge Combination Of Factors Could Fuel Inflation Rate In Future Months

Workers’ wages are rising at the fastest pace in four years and consumer confidence is surging. But those signs of a reviving economy also are raising concerns about possible inflation.

The Labor Department said Tuesday its Employment Cost Index rose 3 percent over the 12-month period through March, including the steepest advance in salaries since 1992.

“It tells me there are the beginnings of some pressure on wages, although it’s too soon to say it marks a trend,” said economist Richard Berner of Mellon Bank in Pittsburgh. “There’s a lot of pressure on companies to hold the line on cost growth. … But it’s certainly something to keep our eye on in coming months.”

Although the report showed the biggest rise in total compensation in two years, it was unlikely to relieve the anxiety of many workers, whose stagnant wages have become a political issue in this campaign year.

Benefit increases were among the smallest on record and included the first quarterly decline since the government began monitoring in 1982. And while compensation of white-collar workers rose 3.4 percent and beat the 1995 inflation rate of 2.5 percent, wages and benefits of blue-collar workers and services industry employees rose just 2.2 percent.

A survey by the New York-based Conference Board found that consumer confidence in the economy surged in April as worries over finding jobs dropped to a six-year low.

The proportion of survey participants who see a tough job market fell from 26.2 percent to 21.3 percent, the lowest percentage in more than six years, the business-funded research group said Tuesday.

Another economic forecast Tuesday was mixed.

The National Association of Purchasing Management reported a survey found its members predicting the U.S. economy will slow in the second half of the year and manufacturing employment will fall.

But the purchasing managers forecast that inflation pressures from U.S. factories will remain low, with only a 0.6 percent average rise in prices of raw materials for all of 1996.

In its report, the Labor Department said wages and salaries jumped 3.2 percent in the last year, the steepest gain since an identical increase in the 12 months ended in March 1992.

But benefit costs rose just 2.2 percent, the slowest since the government began keeping track in 1982. They actually fell 0.1 percent in the January-March quarter.