U.S. earnings growth to pick up further later this year

The broadest measure of average hourly earnings was up 0.3% m/m in April, bringing average hourly earnings up 2.3% y/y, versus 2.2% in April. Average hourly earnings for production and non-supervisory workers were up 0.3% m/m and 2.0% y/y. 

Wage growth has disappointed during the recovery, although signs are emerging of a reversal of this trend in both the AHE series and the employment cost index. 

"We expect wage growth to pick up further later this year as labor market slack diminishes further and the recovery remains on track. Although we do not view faster wage growth as a precondition to Fed tightening, more rapid growth would make the committee's decision easier. We continue to forecast the first rate hike in September and see the May payroll report as reinforcing that view." said Barclays Capital