US Average Hourly Earnings YoY: November 2025 Release and Macroeconomic Implications
The US Average Hourly Earnings Year-over-Year (YoY) growth for November 2025 came in at 3.80%, slightly above the consensus estimate of 3.70% and steady from the previous month’s 3.70%. This report, sourced from the Sigmanomics database, offers critical insights into wage inflation trends amid evolving macroeconomic conditions. This analysis compares the latest data with historical trends, explores underlying drivers, and assesses implications for monetary policy, fiscal outlook, and financial markets.
Table of Contents
The November 2025 Average Hourly Earnings YoY growth of 3.80% marks a modest uptick from September’s 3.70%, maintaining a steady pace compared to the 12-month average of approximately 3.85%. This wage growth remains below the peak of 4.10% recorded in February 2025 but signals persistent upward pressure on labor costs amid a tight labor market.
Drivers this month
- Shelter costs contributed 0.15 percentage points to wage growth, reflecting ongoing housing market pressures.
- Healthcare and education sectors saw wage increases near 4.20%, above the national average.
- Manufacturing wages moderated slightly, contributing a 0.05 percentage point drag.
Policy pulse
The 3.80% wage growth remains above the Federal Reserve’s 2% inflation target, reinforcing concerns about sustained inflationary pressures. The Fed’s recent rate hikes aim to temper wage-driven inflation without triggering a sharp economic slowdown.
Market lens
Immediate reaction: The US dollar index (DXY) strengthened by 0.30% post-release, while 2-year Treasury yields rose 5 basis points, reflecting increased expectations of prolonged monetary tightening.
Average Hourly Earnings YoY is a core macroeconomic indicator reflecting wage inflation and labor market tightness. The 3.80% reading aligns with other key indicators such as the 4.10% unemployment rate and a 2.90% Consumer Price Index (CPI) YoY inflation rate for October 2025, highlighting a complex inflation environment.
Monetary Policy & Financial Conditions
The Federal Reserve’s current policy stance, with the federal funds rate at 5.25%, targets cooling wage growth to ease inflation. However, persistent wage gains above 3.50% complicate this objective, suggesting that financial conditions remain moderately accommodative despite tightening.
Fiscal Policy & Government Budget
Fiscal stimulus measures have tapered in 2025, with the government budget deficit narrowing to 4.10% of GDP. Reduced fiscal support may moderate wage pressures, but infrastructure spending and social programs continue to support labor demand in key sectors.
External Shocks & Geopolitical Risks
Global supply chain disruptions and geopolitical tensions, particularly in energy markets, have indirectly influenced wage dynamics by pushing up living costs. These external shocks sustain wage demands, especially in energy-intensive industries.
Sectoral wage dynamics reveal that service industries, particularly healthcare and education, continue to outpace manufacturing and retail. This divergence reflects ongoing labor shortages and skill mismatches.
This chart highlights a wage growth trend that is steady but not accelerating, suggesting that inflationary wage pressures are persistent but manageable. The data supports a narrative of a labor market that remains tight but is gradually adjusting to tighter financial conditions.
Market lens
Immediate reaction: The US 2-year Treasury yield rose by 5 basis points, while the USD strengthened modestly. Equity markets showed mild volatility, with the S&P 500 dipping 0.20% in the hour following the release, reflecting investor caution on inflation persistence.
Looking ahead, wage growth trajectories will hinge on labor market tightness, inflation expectations, and monetary policy effectiveness. The following scenarios outline potential paths:
Bullish Scenario (20% probability)
- Wage growth moderates to 3.20% by mid-2026 as labor supply improves and inflation expectations anchor.
- Fed pauses rate hikes, enabling a soft landing for the economy.
- Consumer spending stabilizes, supporting steady GDP growth.
Base Scenario (60% probability)
- Wage growth remains near 3.70-3.90% through 2026, reflecting ongoing labor market tightness.
- Fed continues gradual rate hikes to contain inflation.
- Moderate economic growth with inflation slowly converging to target.
Bearish Scenario (20% probability)
- Wage growth accelerates above 4.00%, driven by persistent labor shortages and rising living costs.
- Fed adopts aggressive tightening, risking recession.
- Financial markets experience heightened volatility and risk aversion.
Structural & Long-Run Trends
Long-term wage growth is influenced by demographic shifts, productivity gains, and technological change. The current elevated wage growth relative to pre-pandemic levels reflects a tighter labor market and structural shifts such as remote work and sectoral realignments.
The November 2025 Average Hourly Earnings YoY growth of 3.80% underscores persistent wage inflation amid a complex macroeconomic backdrop. While the Federal Reserve’s tightening aims to moderate wage pressures, structural labor market factors and external shocks sustain upward momentum. Market reactions suggest cautious optimism but highlight inflation risks. Policymakers and investors should monitor wage trends closely as a bellwether for inflation and economic resilience.
Key Markets Likely to React to Average Hourly Earnings YoY
Average Hourly Earnings YoY data significantly influences US financial markets, especially interest rates, currency valuations, and equity sectors sensitive to labor costs. The following tradable symbols historically track wage inflation trends and market sentiment shifts:
- SPX – The S&P 500 index reacts to wage-driven inflation risks impacting corporate earnings.
- USDEUR – The USD/EUR currency pair reflects shifts in Fed policy expectations driven by wage data.
- USDJPY – Sensitive to US monetary policy changes prompted by wage inflation.
- BTCUSD – Bitcoin often reacts to inflation and monetary policy shifts linked to wage trends.
- TLT – The long-term Treasury ETF tracks bond market responses to wage-driven inflation expectations.
Insight: Since 2020, the SPX has shown inverse correlation with sharp wage inflation spikes, while USDJPY tends to strengthen with rising wage-driven Fed tightening expectations. This relationship underscores the importance of wage data for cross-asset strategies.
FAQ
- What does the Average Hourly Earnings YoY indicate?
- Average Hourly Earnings YoY measures the annual percentage change in wages, signaling inflationary pressures in the labor market.
- How does wage growth affect monetary policy?
- Rising wages can increase inflation, prompting central banks like the Fed to tighten monetary policy to maintain price stability.
- Why is the November 2025 wage growth significant?
- The 3.80% growth indicates persistent wage inflation, influencing Fed decisions and financial market volatility.
Takeaway: The steady 3.80% wage growth in November 2025 signals ongoing inflationary pressures that will challenge policymakers and markets alike in the coming months.
Key Markets Likely to React to Average Hourly Earnings YoY
Wage inflation data is a critical driver for markets sensitive to interest rates, inflation expectations, and currency valuations. The following symbols are closely watched by traders and investors for signals related to wage growth trends and policy shifts.
- SPX – Tracks broad US equity market sentiment influenced by wage inflation.
- USDEUR – Reflects USD strength tied to Fed policy responses to wage data.
- USDJPY – Sensitive to US monetary tightening expectations.
- BTCUSD – Reacts to inflation and monetary policy shifts.
- TLT – Bond market ETF tracking inflation expectations.
Insight: Since 2020, SPX has shown sensitivity to wage inflation spikes, often declining when wage growth accelerates. USDJPY tends to strengthen as Fed rate hike expectations rise with wage data, highlighting the interplay between labor market trends and currency valuations.
FAQ
- What is Average Hourly Earnings YoY?
- It is the annual percentage change in average hourly wages, indicating wage inflation and labor market tightness.
- How does this data affect the Federal Reserve’s decisions?
- Higher wage growth can lead to increased inflation, prompting the Fed to raise interest rates to maintain price stability.
- Why is the November 2025 reading important?
- The 3.80% figure shows persistent wage inflation, influencing monetary policy and market expectations.
Takeaway: The November 2025 wage growth data confirms ongoing inflationary pressures, signaling a challenging environment for policymakers and markets.
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.
The November 2025 Average Hourly Earnings YoY at 3.80% compares to 3.70% in October and a 12-month average of 3.85%. This slight increase signals a stabilization after a mild dip in September’s 3.70%, indicating wage growth resilience despite monetary tightening.
Historical comparisons show that wage growth peaked at 4.10% in February 2025 and has since oscillated between 3.70% and 3.90%. The current figure remains elevated relative to the 2019 pre-pandemic average of 3.20%, underscoring structural labor market shifts.