A man considers prices in a grocery store aisle amidst "Gasoline Price Today" signage.
The U.S. labor market showed resilience in March with 178,000 jobs added, surpassing expectations. However, wage growth decelerated, signaling potential challenges for consumer spending amid rising energy prices.
According to the Bureau of Labor Statistics, average hourly earnings increased by only 0.2% in March, falling short of the anticipated 0.3%. Year-over-year, earnings were up 3.5%, also below the projected 3.7%. This slowdown follows February’s stronger figures of 0.4% monthly and 3.8% annually.
In addition to the wage slowdown, the average work week was shorter than expected at 34.2 hours, against the expected 34.3. The average hourly wage for private sector employees was $37.38 in March, a modest increase from $37.29 in February.
Bret Kenwell, U.S. investment analyst at EToro, pointed out that the softer wage data, combined with rising energy prices, could strain consumers’ budgets. Lydia Boussour, senior economist at EY-Parthenon, echoed this concern, noting that moderating wage and job gains, coupled with rising gasoline prices, are squeezing disposable incomes and weakening the consumer outlook.
Looking ahead, EY-Parthenon anticipates a largely frozen labor market in 2026, characterized by selective hiring, compressed wage growth, and strategic workforce resizing due to strained labor supply.
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