Average hourly earnings

Release Date: On the first Friday of a new month
Release Time: Usually at 9:00am Eastern US time
Released By: The Bureau of Labor Statistics


The Average Hourly Earnings is a monthly report that is released by the Bureau of Labor Statistics, a parastatal within the US Department of Labour on the first Friday of a new month. This is part of the employment data that is released on the first Friday of every month, and these data also include the Non-Farm Payrolls report and the US Unemployment Rate.

The Average Hourly Earnings (m/m) report measures the change in the prices that businesses pay for labor, excluding the farming industry. Simply put, this report measures the change in the wage bill that non-agricultural businesses incur, month after month.

Time of Release

The Average Hourly Earnings is usually released on a monthly basis, and usually covers the data for the previous month in the whole of the United States. The release time is usually at 9.30am Eastern US time, every first Friday of the new month. This news release is a composite package which also includes the Non-Farm Employment Change and the Unemployment Rate. For the month of March 2014, the US Trade Balance was also released at the same time. Information about this news release is usually obtained from the website of the Bureau of Labor Statistics, as well as other news sources such as Bloomberg and Thomas Reuters.

Interpreting the Data

The Average Hourly Earnings report is one of the earliest data published in a month that is related to producer and consumer inflation. The Producer Price Index (PPI) is one of the inflation data, and usually measures the rate of increase of the cost of manufacturing goods. Earnings of workers are (labor cost or wage bill) one of the components of the costs associated with manufacturing. Producer inflation will lead to manufacturers passing on costs to the consumer, which will also lead to consumer inflation, and will alert the central bank of the affected country to consider raising rates. Therefore, a rise in the Average Hourly Earnings is good for the currency in focus (USD), while a fall in Average Hourly earnings is considered USD negative. However, the effects on the currency are not felt immediately, because the other news data (NFP and Unemployment Rate) are very high impact news releases which will exert more of an immediate effect. It is only when the inflation data are to be released that the Average Hourly earnings are brought into consideration.

In the case of the US which maintains a near-zero interest rate policy, a consistent rise in Average Hourly Earnings will mean that a case would be made to watch inflationary pressures and the US Federal Reserve may have to make a decision on raising interest rates from current levels.

As a trading indicator, this report is not of immediate trading significance. It becomes relevant in the fundamental analysis of how to trade the PPI or Core CPI reports which come up later in the month.

Conclusion

The Average Hourly Earnings are a measure of labor costs. Increased labor costs will cause businesses to pass on these costs to the consumer, leading to consumer inflation and the increased likelihood of interest rate increases. Reduction in labor costs will have the opposing effects.