US hourly wages preview - Nomura

Analysts at Nomura explained their outlook for average hourly earnings.

Key Quotes:

"After the first m-o-m decline since 2014, partly driven by weather-related disruptions, we expect a solid 0.3% (0.26%) increase for average hourly earnings (AHE) in November. 

On a 12-month basis, this would bring AHE up 0.3pp to 2.7% y-o-y, partially reversing the 0.4pp decline in October. 

Moreover, upward revisions to the previous month are possible. October’s AHE was likely driven down by an influx of lower-paid workers who were off of payrolls the previous month due to hurricane disruptions. 

Wage growth remains subdued relative to previous recoveries. While some structural forces, such as decreased business dynamism, changes in the labor force composition between high-income and low-income earners, and lower labor market turnover, are likely adding headwinds to compensation growth, strong incoming data should be supportive of a gradual increase in AHE over the medium term."