US Average Hourly Earnings MoM: November 2025 Release and Macro Implications
The US Average Hourly Earnings (AHE) MoM for November 2025 came in at 0.20%, below the 0.30% consensus estimate and down from October’s 0.40% reading. This slowdown in wage growth signals a moderation in labor cost pressures amid evolving macroeconomic conditions. Drawing on the Sigmanomics database and historical context, this report dissects the latest data, compares it with past trends, and evaluates its implications for monetary policy, fiscal outlook, and financial markets.
Table of Contents
The November 2025 Average Hourly Earnings MoM growth of 0.20% marks a notable deceleration from the prior month’s 0.40% and remains below the 12-month average of approximately 0.31%. This moderation reflects easing wage inflation pressures amid a cooling labor market. The US economy continues to navigate a complex environment shaped by persistent inflation, tightening monetary policy, and geopolitical uncertainties.
Drivers this month
- Service sector wage growth slowed, contributing roughly 0.12 percentage points.
- Manufacturing wages remained flat, subtracting 0.03 percentage points.
- Energy sector wages edged up 0.05 percentage points, supported by recent price volatility.
Policy pulse
The current 0.20% wage growth is below the Federal Reserve’s preferred inflation target proxy, signaling some relief in underlying inflation pressures. This may reduce urgency for aggressive rate hikes but keeps the door open for cautious policy adjustments.
Market lens
Immediate reaction: The US dollar index (DXY) strengthened 0.15% post-release, while 2-year Treasury yields dipped 5 basis points, reflecting a mild easing in rate hike expectations.
Average Hourly Earnings growth is a core indicator of wage inflation and consumer purchasing power. The November print at 0.20% MoM contrasts with the 0.40% in October and the 0.30% average over the past year, signaling a deceleration in wage pressures. This aligns with recent softening in the unemployment rate, which held steady at 3.70%, and a slight slowdown in job openings.
Monetary Policy & Financial Conditions
The Federal Reserve’s ongoing tightening cycle, with the federal funds rate near 5.50%, aims to temper inflation without triggering a recession. Slower wage growth supports the Fed’s narrative that inflation is cooling, potentially allowing for a pause or slower pace in rate hikes.
Fiscal Policy & Government Budget
Fiscal stimulus remains muted with a government budget deficit narrowing to 4.20% of GDP in Q3 2025. Reduced fiscal expansion limits upward pressure on wages and inflation, complementing monetary restraint.
External Shocks & Geopolitical Risks
Global supply chain disruptions have eased, but geopolitical tensions in Eastern Europe and East Asia continue to inject uncertainty. Energy price volatility remains a wildcard for wage dynamics in related sectors.
This chart highlights a clear deceleration in wage growth momentum, trending downward after a mid-year peak. The data signals a potential easing of inflationary wage pressures, which could influence monetary policy decisions and market expectations in the near term.
Market lens
Immediate reaction: US Treasury yields on the 2-year note fell by 5 basis points, while the USD strengthened modestly. Equity markets showed mixed responses, with financials outperforming amid expectations of a slower Fed tightening cycle.
Looking ahead, wage growth trajectories will be critical for inflation and policy outlooks. Three scenarios emerge:
- Bullish (20% probability): Wage growth stabilizes near 0.20%, supporting steady consumer spending and moderate inflation, allowing the Fed to pause rate hikes.
- Base (60% probability): Wage growth hovers between 0.20% and 0.30%, maintaining inflation near target but requiring cautious Fed vigilance.
- Bearish (20% probability): Wage growth rebounds above 0.40%, reigniting inflation fears and prompting further monetary tightening.
Structural & Long-Run Trends
Long-term wage growth is influenced by demographic shifts, productivity gains, and labor market participation. The current moderation may reflect structural adjustments post-pandemic, including automation and remote work trends, which could cap wage pressures despite tight labor markets.
Financial Markets & Sentiment
Market sentiment remains cautiously optimistic. The slower wage growth reduces inflation risk premiums, supporting equity valuations and stabilizing bond markets. However, geopolitical risks and fiscal uncertainties continue to temper enthusiasm.
The November 2025 Average Hourly Earnings MoM print of 0.20% signals a meaningful slowdown in wage inflation. This aligns with broader macroeconomic signals of a cooling labor market and easing inflation pressures. While this may ease the Federal Reserve’s tightening bias, risks remain from geopolitical tensions and fiscal policy shifts. Investors and policymakers should monitor wage trends closely as a bellwether for inflation and economic resilience.
Key Markets Likely to React to Average Hourly Earnings MoM
The Average Hourly Earnings MoM data is a key driver for markets sensitive to inflation and interest rate expectations. Wage growth influences consumer spending, corporate margins, and monetary policy decisions, making certain assets particularly reactive.
- SPX: The S&P 500 index often reacts to wage data as it impacts earnings forecasts and Fed policy outlook.
- USDEUR: The US dollar to euro pair is sensitive to US inflation data and Fed rate expectations.
- BTCUSD: Bitcoin often moves on shifts in risk sentiment tied to inflation and monetary policy.
- TLT: Long-term Treasury ETF prices fluctuate with inflation expectations and wage growth trends.
- USDCAD: The US dollar to Canadian dollar pair is influenced by commodity prices and US wage-driven inflation.
Insight: Average Hourly Earnings vs. SPX Since 2020
Since 2020, the Average Hourly Earnings MoM and the S&P 500 (SPX) have shown an inverse relationship during periods of sharp wage inflation. For example, spikes in wage growth in early 2022 coincided with market volatility and corrections. Conversely, periods of wage moderation, such as mid-2023, supported equity rallies. This dynamic underscores the importance of wage data as a leading indicator for equity market sentiment and risk appetite.
FAQs
- What is the significance of the US Average Hourly Earnings MoM data?
- The Average Hourly Earnings MoM measures monthly wage growth, indicating inflationary pressures and consumer income trends.
- How does the November 2025 reading compare historically?
- At 0.20%, it is the slowest monthly wage growth since May 2025 and below the 12-month average of 0.31%, signaling a moderation.
- What are the macroeconomic implications of slower wage growth?
- Slower wage growth can ease inflation pressures, influence Fed policy decisions, and impact consumer spending and financial markets.
Takeaway: The November 2025 slowdown in US wage growth eases inflation concerns but requires close monitoring amid persistent economic uncertainties.
SPX – S&P 500 index, sensitive to wage-driven inflation and Fed policy.
USDEUR – US dollar to euro, reacts to US inflation and interest rate changes.
BTCUSD – Bitcoin, influenced by inflation expectations and risk sentiment.
TLT – Long-term Treasury ETF, tracks inflation and wage growth trends.
USDCAD – US dollar to Canadian dollar, impacted by commodity prices and US wage inflation.
The November 2025 Average Hourly Earnings MoM growth of 0.20% is down from October’s 0.40% and below the 12-month average of 0.31%. This marks the slowest monthly wage growth since May 2025 (0.20%). The trend suggests a gradual easing of wage inflation pressures after a peak in mid-2025.
Comparing the current print with historical data from the Sigmanomics database, wage growth has fluctuated between 0.20% and 0.50% over the past year, with the highest spike in February 2025 at 0.50%. The recent moderation aligns with a broader cooling labor market and tighter financial conditions.