Persistent low interest rates are dampening income growth in the property/casualty industry, the latest report from the National Council on Compensation Insurance (NCCI) suggests.
NCCI said that the Federal Open Market Committee has left rates stagnant at 0.25% to 0.50% even after four meetings this year, since December 2015. Prior to last year, the rate has remained unchanged since 2008 at 0% to .25%.
Treasury notes are expected to fare better. Quoting investment ratings firm Moody’s, NCCI said yields from 10-year treasury notes are seen to climb to 3.6% in 2017.
Average weekly wages were also on a downtrend in 2015, albeit marginally compared to 2014. Contractors’ wages shrank to 8.5% last year, compared to 8.6% in the same period in 2014. Private sector pay lost traction faster as it declined to 5.0% in 2015, compared to 5.6% in 2014.
A silver lining in the report showed employment growth in the private sector hitting 2.4% in 2015, which NCCI said is the fastest since the recession several years ago.
Professional, business and healthcare services are adding jobs. In contrast, the manufacturing and mining industries are losing jobs this year. Manufacturing accounts for 16% of the manual premium for NCCI states, so the decline in the sector is cause for concern, the organization said.
Construction, another major sector which makes up 24% of the premiums of NCCI states, remained largely unchanged.
