Data on average hourly earnings just released by the U.S. Bureau of Labour Statistics in the March jobs report was disappointing.
Wage growth has taken center stage in recent months as it has advanced to post-crisis highs, raising expectations of a faster-than-expected economic recovery and a tightening labour market that could put the Fed behind the curve with regard to tightening monetary policy.
As chart 1 illustrates, average hourly earnings fell 0.1% from the previous month.
As chart 2 shows, the monthly change dragged the year-over-year growth rate of average hourly earnings down to 2.2% from February’s 2.5% reading.
This is likely due to the rebound in average weekly hours worked to 34.5 in March, displayed in chart 3, after a weather-induced drop in recent months.
“Solid employment growth and upward revisions along with a rebound in the workweek are good news,” says Neil Dutta, head of U.S. economics at Renaissance Macro.
“The flat growth in hourly earnings and the lack of downward movement in the unemployment rate reminds investors that the Fed has plenty of breathing room, for now.”
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