American workers' wage gains lost momentum in March despite strong hiring, economists say

• Average hourly wages increased to $37.38 in March, up only 0.2% from February versus the expected 0.3% gain, with yearly growth at 3.5% compared to the forecasted 3.7%
• The average work week shortened to 34.2 hours in March, down from 34.3 hours in February and below economists' expectations
• Economists warn that compressed wage growth combined with surging gasoline prices is reducing household spending power and making the consumer economy more fragile

Market Summary: U.S. Wage Growth Decelerates in March

Key Employment Data

The Bureau of Labor Statistics reported that the U.S. economy added 178,000 jobs in March, significantly exceeding economist expectations of 60,000. The unemployment rate declined to 4.3%. However, wage growth showed notable deceleration, raising concerns about consumer spending power.

Wage Growth Metrics

Average hourly earnings increased just 0.2% month-over-month and 3.5% year-over-year, both falling short of expectations (0.3% and 3.7% respectively). This represents a slowdown from February's readings of 0.4% monthly and 3.8% annually. The average hourly wage for private sector workers reached $37.38 in March, up from $37.29 in February.

The average workweek also contracted to 34.2 hours, below the expected 34.3 hours.

Market Implications

Analysts expressed mixed sentiment about the report. While the strong hiring numbers provided reassurance about labor market resilience, the softer wage data raises concerns about economic momentum. EY-Parthenon senior economist Lydia Boussour noted that wage gains "lost momentum," warning that combined with rising gasoline prices, this creates a more fragile economic outlook by squeezing disposable incomes.

eToro analyst Bret Kenwell highlighted that surging energy prices are acting as an immediate headwind on consumers, particularly problematic given the weaker wage growth.

Forward Outlook

Economists anticipate a "largely frozen labor market in 2026" characterized by selective hiring, compressed wage growth, and strategic workforce adjustments as labor supply remains constrained. The deceleration in wages could influence Federal Reserve policy decisions regarding inflation and interest rates.