How to Read the Average Hourly Earnings

What is the Average Hourly Earnings?

Average hourly earnings come from the Current Employment Statistics establishment survey, in which BLS collects payroll records from about 119,000 businesses and government agencies covering about 622,000 worksites. Earnings are produced for the private sector for all employees and for production and nonsupervisory employees, with industries classified under the 2022 NAICS.

Production and nonsupervisory employees are defined as production and related employees in manufacturing and mining and logging, construction workers in construction, and nonsupervisory employees in private service-providing industries, so that series covers a narrower group than all employees.

Production facts:

• Publisher: U.S. Bureau of Labor Statistics
• Frequency: Monthly
• Typical release time: 8:30 a.m. ET on the dates in the BLS Employment Situation schedule
• Primary metric: MoM and YoY wage growth
• Market sensitivity: Very High
• Data type: Hard data
• Economic indicator type: Lagging
• Revision risk: Medium

Key components to watch

The headline (MoM and YoY wage growth) is the most widely quoted but rarely the most informative number. The components that follow reveal whether the headline result is broad-based or concentrated, improving or deteriorating, and consistent with prior trends.

• All employees, private nonfarm payrolls
• Production and nonsupervisory employees
• Average weekly earnings
• Earnings by industry sector

For any release with multiple components, the investor's task is not to memorize every number but to identify which components are most relevant to the current investment thesis and track those with the most care.

How to read the headline: actual versus expected

Markets react to the gap between the published MoM and YoY wage growth and the consensus forecast, not to the level alone. A stronger-than-expected or weaker-than-expected result is defined against that forecast, so check what was expected before reading the number.

The Average Hourly Earnings carries medium revision risk: The establishment survey marks its two most recent months preliminary, as the (p) flag in Table B-3 shows, and revises each initial estimate twice, in the following two months, for additional sample reports and recalculated seasonal factors. Read any revision to the prior period together with the new figure.

Market impact by asset class

The Average Hourly Earnings primarily affects the following markets: Stocks, Treasuries, Fed funds futures, USD.

Stronger than expected result: In an inflation-elevated, tightening environment, a stronger result typically pressures interest-rate-sensitive assets and can strengthen the dollar. In a growth-slowing environment, a stronger result can be equity-supportive if it reduces recession fears.

Weaker than expected result: In a growth-concern environment, a weaker result may reinforce concerns about economic deceleration. If the Fed is watching this specific indicator for policy calibration, a persistent pattern of below-consensus results may shift the rate path.

In-line result: In-line results typically produce muted market reactions unless there are significant component deviations from expectations. The market had already priced the consensus, so confirmation requires little repricing.

Revision risk and methodology notes

The Average Hourly Earnings carries medium revision risk. The establishment survey marks its two most recent months preliminary, as the (p) flag in Table B-3 shows, and revises each initial estimate twice, in the following two months, for additional sample reports and recalculated seasonal factors. The estimate is final after those two revisions. An annual benchmark re-anchors payroll employment to unemployment insurance records.

Primary source: U.S. Bureau of Labor Statistics: Average Hourly Earnings.

Publisher documents read for this page:

• U.S. Bureau of Labor Statistics: Employment Situation Technical Note
• U.S. Bureau of Labor Statistics: Table B-3. Average hourly and weekly earnings of all employees on private nonfarm payrolls by industry sector, seasonally adjusted
• U.S. Bureau of Labor Statistics: Schedule of Releases for the Employment Situation

Common investor mistakes

• Reacting to the headline without checking the components. The headline can diverge significantly from the underlying trend revealed by the components. A headline beat driven by a volatile component may not indicate the same strength as a broad-based improvement.
• Ignoring revisions to prior periods. An initial strong number revised down in the following release tells a different story than a number that stands firm.
• Not knowing what is consensus-priced. Reacting to a number without knowing what was already expected conflates information with noise. The market reaction is driven by the deviation from expectations, not by the level of the number.
• Applying the same interpretation across different regimes. The same headline result has different implications depending on the Fed's current stance, the growth trend, and what is already priced into the yield curve and equity multiples.

Related releases

The Average Hourly Earnings should be read alongside:

• Employment Situation (Jobs Report)
• Nonfarm Payrolls
• Unemployment Rate
• Labor Force Participation Rate
• Employment-Population Ratio

Frequently asked questions