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USD Average Hourly Earnings m/m, Sep 05, 2025

Average Hourly Earnings: September 5, 2025 Data Signals Continued Wage Stagnation in the US

BREAKING: The Bureau of Labor Statistics (BLS) released the Average Hourly Earnings m/m data for September 5, 2025, revealing a figure of 0.3%. This matches both the forecast and the previous reading of 0.3%. Given its high impact designation, this data point warrants a closer look at what it signifies for the US economy and the value of the USD.

The Average Hourly Earnings report, released monthly by the Bureau of Labor Statistics (BLS), is a key indicator of labor market health and a leading predictor of inflation. This month's data, reflecting no change from the previous period and meeting expectations, points to ongoing trends in wage growth and potential implications for monetary policy. Let's delve into the details and explore why this seemingly static number holds significant weight.

What are Average Hourly Earnings?

The Average Hourly Earnings m/m (month-over-month) measures the percentage change in the price businesses pay for labor, excluding the farming industry. This excludes bonuses and only looks at the price per hour of work. In simpler terms, it shows how much the average worker is earning per hour compared to the previous month. It's a crucial metric because it reflects the underlying cost of labor, which is a major component of overall business expenses. This data is released monthly, typically on the first Friday after the month ends. The next release is scheduled for October 3, 2025.

Why Do Traders Care About Average Hourly Earnings?

Traders and economists closely monitor Average Hourly Earnings because it's a leading indicator of consumer inflation. The underlying logic is straightforward: When businesses pay their employees more, they often pass those increased costs onto consumers in the form of higher prices for goods and services. This leads to inflation.

Therefore, a higher-than-forecast Average Hourly Earnings figure is generally seen as positive for the currency. It suggests a strengthening economy with rising wages, potentially leading to increased consumer spending and, ultimately, higher inflation. This, in turn, could prompt the Federal Reserve to consider raising interest rates to control inflation, which typically strengthens the currency. Conversely, a lower-than-forecast figure can signal a weakening economy and potentially lower inflation, leading to a weaker currency.

Analyzing the September 5, 2025 Data: Stagnant Wage Growth

The September 5, 2025, release of 0.3%, matching both the forecast and the previous reading, paints a picture of stagnant wage growth. While a positive number indicates growth, the fact that it's unchanged suggests that the labor market isn't experiencing significant upward pressure on wages. This has several implications:

  • Inflation Concerns: The consistent 0.3% increase suggests that inflationary pressures stemming from wage growth remain moderate. While the overall inflation picture involves many factors, this data point provides little evidence of accelerating wage-driven inflation.
  • Consumer Spending: With wages not increasing significantly, consumer spending may be constrained. While other factors influence consumer behavior, stagnant wage growth can limit disposable income and potentially dampen overall economic growth.
  • Monetary Policy Implications: The Federal Reserve closely monitors wage growth when making decisions about interest rates. This data release, with its consistent figure, may lead the Fed to maintain its current monetary policy, assuming other economic indicators don't drastically change. A significant acceleration in wage growth might prompt the Fed to consider raising interest rates to combat potential inflation, while a significant slowdown could push them towards lowering rates to stimulate the economy.
  • Labor Market Dynamics: The lack of significant wage growth could reflect broader issues in the labor market, such as underemployment or a lack of skilled workers in certain sectors. It might also indicate that companies are hesitant to raise wages due to concerns about future economic conditions.

Historical Context and FF Notes

It's important to consider this data in the context of past performance. The BLS has historically revised its methodology for calculating Average Hourly Earnings. As noted in the FF Notes, the source changed its series calculation formula as of February 2010. This highlights the importance of comparing data points within the same calculation framework.

Looking Ahead: The October 3, 2025 Release

All eyes will be on the next Average Hourly Earnings release on October 3, 2025. Traders and economists will be looking for any signs of a shift in wage growth trends. A significant increase in Average Hourly Earnings could trigger a rally in the USD as expectations for higher interest rates increase. Conversely, a significant decrease could weaken the USD and raise concerns about the overall health of the US economy.

Conclusion:

The September 5, 2025, Average Hourly Earnings data release, showing a consistent 0.3% increase, highlights a period of stagnant wage growth in the US. While not necessarily alarming on its own, it warrants careful monitoring alongside other economic indicators. This data point will undoubtedly play a role in the Federal Reserve's future monetary policy decisions and will continue to be a closely watched metric by traders and investors alike. The key takeaway is that consistent monitoring of this and other economic indicators is essential for understanding the complex dynamics of the US economy and its impact on the global financial markets.