Seasonality in the Employment Cost Index

This article examines the effect of seasonal adjustment on Employment Cost Index (ECI) quarterly estimates, which capture 3-month percent changes in employee compensation per hour worked. The article shows that this effect is small for the most aggregate ECI series, although there are some industry groups for which the effect is larger. The U.S. Bureau of Labor Statistics (BLS) Employment Cost Index (ECI) is a measure of the change in compensation per hour worked for U.S. workers.1 It is published quarterly. Like many statistical programs, the ECI program publishes seasonally adjusted estimates along with its unadjusted estimates. The factors used in seasonal adjustment reflect how a series is expected to change given its historical annual pattern. Removing the series’ expected seasonal movement helps isolate short-term changes beyond those driven by seasonality.2 This article discusses the effect of seasonal adjustment on ECI quarterly estimates.