Wage Growth
Wage growth measures the rate at which average employee earnings increase over time.
Meaning in Practice
Wage growth is typically reported as a year-over-year percentage change in average hourly or weekly earnings. It reflects labor market tightness and productivity trends. Persistent wage increases can signal rising inflationary pressures.
Why It Matters
Strong wage growth supports household income and consumption. However, excessive wage increases may contribute to higher inflation. Central banks monitor wage data when assessing price stability risks.
Market Impact
Accelerating wage growth can raise expectations of tighter monetary policy. Bond yields may increase, and equity markets may react depending on margin implications. Currency markets respond to changes in rate outlook.
Example
If average wages increase from 20 to 21 per hour over a year, wage growth is 5 percent.