The indicator is published at regular intervals once a month an organization called the Bureau of Labor Statistics, which is under the jurisdiction of the U.S. Department of Labor. The data is updated on the first Friday each month at 8:30 am in New York.
This indicator refers to the coincident type, characterized by low volatility coincides with the main thrust of the current business cycle and is expressed as an absolute value or as an index correlated to the previous period.
Effect of change in the average hourly wage for the movement of the market:
If the growth rate has exceeded the expectations of most market participants, it is considered a prerequisite for the growth of inflation and increases in interest rates. In situations where the increase in the average hourly wage exceeds the growth of labor productivity, it is also considered a reason for the growth in inflation.
Growth of inflation for traders working on the Forex means imminent devaluation of a currency, which in turn reduces the level of competitiveness of the state. Looking at the situation from the other side, it leads to an increase in nominal interest rates, and in some cases, real interest rates. These processes usually help strengthen currency exchange.
A key feature of this indicator is that it is an early signal, predicting growth of wages. In assessing the market situation with this indicator is forecast to the market trends encouraged, subject to labor cost index (ECI), because it is more extensive and includes not only wages, but also income in the form of pensions, vacation pay and benefits covering medical insurance.
The entire index of average hourly earnings can grow under the influence of factors not affecting the increase in inflation. Such factors include the increase in the number of skilled workers and an increase in the number of hours of overtime, at night or on holidays.
That's why analysts and experts in the preparation of forecasts of inflation pay much more attention to labor cost index, which is published quarterly and is considered more extensive and fair view of the situation of inflation indicator.