Average Hourly Earnings YoY
What is Average Hourly Earnings YoY?
Average Hourly Earnings (AHE), released as part of the monthly Bureau of Labor Statistics jobs report (alongside Nonfarm Payrolls), measures the average hourly wage paid to private-sector, non-supervisory workers. It is expressed as both a month-over-month and year-over-year percentage change. The data covers approximately 80% of the US workforce.
Why does it matter for investors?
Average Hourly Earnings is the Fed's most direct real-time measure of wage inflation. Persistent wage growth above 3.5% annually risks becoming embedded in services inflation, as companies pass higher labor costs to consumers. The Fed's dual mandate requires balancing full employment with price stability — strong wage growth creates tension between the two goals. Earnings above 0.4% MoM typically trigger a hawkish market reaction.
What to watch for
- ›MoM change vs. consensus estimate (above 0.4% = wage inflation concern)
- ›YoY rate vs. CPI inflation (real wage growth = purchasing power)
- ›Trend: is wage growth accelerating or decelerating?
- ›Sector breakdown: leisure & hospitality wages often lead the cycle
- ›Combination with NFP: strong jobs + strong wages = most hawkish signal for Fed
What wage growth rate does the Fed consider inflationary?
The Fed generally considers wage growth above ~3.5% annually as potentially inflationary for services prices (since wage costs drive services CPI). Growth in the 3–3.5% range is broadly consistent with 2% inflation when paired with normal productivity gains.
Market Reaction
QQQ & SPY price change ±5 trading days around this event
Source: Yahoo Finance