As far as we can predict productivity from quarter to quarter, the aggregate hours worked index provides a useful monthly read on the entire economy. Atlanta Fed Index Official name of this index is Southeastern Manufacturing Survey. It is regional manufacturing review that covers such prominent industrial states as Alabama, Georgia, Louisiana, Tennessee and Florida. The survey's industry business conditions index is designed to represent changes in factory-sector: it is above zero when the sector expands and it's below zero when the sector contracts.
Actually, this index has no market importance and it's available after the releasing of the national Purchasing Managers' Index. So this index considered too dated not worth tracking. Average Hourly Earnings One of the most important indicators of the tightness of labor markets and labor cost inflation is Average hourly earnings (AHE). The Bureau of Labor Statistics of the U.S. Department of Labor provides it every month, and it's available one week after the reported month. The indicator seems to take insignificant effect financial markets; unexpected increases can cause rising of interest rates because such increasing considered inflationary, especially if in excess of productivity growth. A large rate of growth of AHE can cause increasing of Fed Funds rate that is also bearish for the bond market. Stock Prices: high wage growth may increase long-term interest rates, reduce profits, and lead to increase of the Fed Funds rate to stem inflation, that is why higher wage inflation is bearish for the stock market.
Exchange Rates: unclear. On one hand it leads to higher nominal interest rates and real ones too. On the other hand high wage inflation leads to high inflation and loss of competitiveness. Ability to Affect Markets: it is an early signal of wage inflation.
Analysis of the Indicator: if the wage growth were above productivity growth, high rates of growth of average hourly earnings would lead to higher inflation.
Employment Cost Index (ECI), closely watched by the Fed, is a measure of wage cost growth. Compared to the quarterly published ECI, the advantage of the average hourly earnings indicator it that it is published monthly and is an early indicator of wage growth in the previous month. But, nevertheless, compared to the ECI, AHE has some minuses. The ECI includes wages and salaries as well as benefits costs, so it is a broader measure of labor costs. In general, the basis of AHE indicator is gross earnings. So they represent changes in basic hourly and incentive wage rates as well as premium pay for overtime, late-shift work and changes in output of workers paid using an incentive based plan. They also demonstrate shifts in the number of employees between relatively high-paid and low-paid work. Changes in earnings for the individual industries making up those groups and divisions will impact averages for industry groups and divisions. Average hourly earnings that are reported by CES are not wage rates.
Average Weekly Earnings
Average Weekly Earnings - multiplying average weekly hours estimates by average hourly earnings estimates derives these estimates. So, weekly earnings are affected the length of the workweek along with changes in average hourly earnings. Monthly trends in these factors as stoppages for varying reason, the proportion of part-time workers, labor turnover during the survey period and absenteeism for which employees are not paid may cause the fluctuations of average workweek. Structural changes in the makeup of the workforce can cause long-term trends of average weekly earnings. For example, persistent long-term rising of the percentage of part-time workers in retail trade and many of the services industries have reduced average workweeks in these industries and have affected the average weekly earnings series. Average workweek.
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