Consumer activity may jump on signs of private sector pay gains

A critical indicator of consumer activity showed solid improvements during the April-June period, suggesting businesses and retailers may begin to notice sales gains in coming months.

A critical indicator of consumer activity showed solid improvements during the April-June period, suggesting businesses and retailers may begin to notice sales gains in coming months.

The BNA Wage Trend Indicator, which measures private sector pay trends, grew to 98.21 during the second quarter, up from 98.01 in the first quarter. While the index remains below the level indicating a healthy job market and consumer sector, it has nonetheless been growing consistently over the past year. The report is particularly encouraging in light of recent months' dismal employment statistics.

"Labor market conditions in the private sector are still improving, although very slowly. At the same time, there is a lot of uncertainty about the forward momentum in the economy, and the WTI's forecast depends on the labor market continuing to improve," said Kathryn Kobe, an economist who helps develop the WTI database.

The report reflects recent reports showing relatively strong private sector activity, which has been marred by widespread public layoffs and budget crises.

As wage and salary figures begin to improve in coming months, retailers can expect sales and shopping trends to improve as well.