USD Average Hourly Earnings m/m, Dec 16, 2025

Wage Growth Decelerates: What the Latest US Average Hourly Earnings Data Means for Inflation and the Dollar

Washington D.C. – December 16, 2025 – A closely watched economic indicator, the Average Hourly Earnings m/m data, was released today by the Bureau of Labor Statistics, revealing a slowdown in wage growth. The actual figure for December 2025 came in at 0.1%, falling short of the forecast of 0.3% and also below the previous month's reading of 0.2%. This high impact data point for the USD carries significant implications for inflation expectations and the trajectory of the US economy.

It's crucial to note that this release experienced a notable delay, being pushed back by 11 days due to the US government shutdown. While this administrative hiccup may have temporarily obscured the data, its release today provides vital insight into the underlying economic landscape.

Why Traders and Investors are Watching Closely

The Average Hourly Earnings m/m report is far more than just a snapshot of paychecks; it's considered a leading indicator of consumer inflation. The reasoning behind this is straightforward: when businesses face increased labor costs, they often pass these higher expenses onto consumers in the form of higher prices for goods and services. This dynamic can create a ripple effect, contributing to broader inflationary pressures throughout the economy.

The "usual effect" of this report is that an 'Actual' figure greater than the 'Forecast' is considered good for the currency. This is because stronger wage growth can signal a robust economy with high demand for labor, which often translates to increased consumer spending and, potentially, a stronger currency. However, in today's release, the opposite scenario has unfolded. The actual wage growth has underperformed both expectations and the previous month's figures, painting a picture of potentially moderating economic activity and inflationary pressures.

Diving Deeper into the Numbers and Their Significance

The data measures the change in the price businesses pay for labor, excluding the farming industry. This specific focus allows for a more precise understanding of wage pressures in the broader private sector. The fact that this is the earliest data related to labor inflation makes it a critical component in forecasting future inflation trends. While the Bureau of Labor Statistics has adjusted its series calculation formula as of February 2010, the fundamental principle of tracking labor costs as a driver of inflation remains consistent.

The Average Hourly Earnings m/m report is released monthly, usually on the first Friday after the month ends. However, as highlighted, external factors like government shutdowns can cause deviations from this regular schedule. The next release is anticipated for January 9, 2026, providing another opportunity to assess the ongoing trends in wage growth.

What the 0.1% Actual Means

The actual reading of 0.1% for Average Hourly Earnings m/m on December 16, 2025, is a significant datapoint. It indicates that, on a month-over-month basis, the average hourly wage paid by businesses (excluding agriculture) has increased by only a modest 0.1%. This is a tangible deceleration from the 0.2% recorded in the previous period and falls considerably short of the 0.3% that economists and market participants had anticipated.

This lower-than-expected figure suggests a few key possibilities for the US economy:

• Cooling Labor Market: The slowdown in wage growth could signal a softening in the demand for labor. Businesses might be facing less pressure to hike wages to attract and retain workers. This could be a natural consequence of economic normalization after periods of high inflation or could indicate a more pronounced slowdown in economic activity.
• Moderating Inflationary Pressures: As a leading indicator of inflation, decelerating wage growth generally points towards a moderation in future consumer price increases. If businesses are not experiencing escalating labor costs, they are less likely to pass these increases onto consumers. This could be welcome news for the Federal Reserve as it seeks to bring inflation back to its target.
• Impact on Consumer Spending: While moderate wage growth is beneficial for controlling inflation, a significant slowdown could also impact consumer spending power. If wages are not keeping pace with the cost of living, consumers may curb their discretionary spending, which could, in turn, affect overall economic growth.
• Federal Reserve's Stance: The Federal Reserve closely monitors wage growth as part of its inflation outlook. This slower-than-expected wage increase might reinforce the Fed's current monetary policy stance or provide further justification for them to hold interest rates steady or even consider future rate adjustments if broader economic data suggests a weakening trend.
• USD Performance: While an "Actual" greater than "Forecast" is typically positive for a currency, the opposite is true when the actual underperforms. The weaker-than-expected wage growth could put some downward pressure on the USD in the short term as it suggests a less robust economic outlook and potentially lower inflationary pressures, which might reduce the attractiveness of dollar-denominated assets for some investors.

Looking Ahead

The next release on January 9, 2026, will be crucial in determining whether this slowdown in wage growth is a temporary blip or the beginning of a more sustained trend. Market participants will be keenly watching for any signs of further deceleration or a rebound. The interplay between wage growth, inflation, and broader economic indicators will continue to shape the narrative surrounding the US economy and the future direction of the USD. Today's data, despite the delayed release, serves as a significant checkpoint in that ongoing economic journey.