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Average Hourly Earnings is a critical labor market indicator that measures the month-over-month change in the price businesses pay for labor. It is a primary component of the U.S. Employment Situation report and serves as an early signal of consumer inflation. When wages rise, consumers have more disposable income, which can drive demand and lead to higher prices for goods and services. The Federal Reserve monitors this data closely to determine if the labor market is overheating.
Calculated by dividing the total estimated payrolls for production and non-supervisory employees by the total number of hours worked, based on a survey of approximately 119,000 businesses and government agencies.
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