Wage Price Index - Wage Growth Wallows

• The wage price index rose by 0.5% in the March quarter, which was slightly below both our own and consensus expectations. The increase in the wage price index in the December quarter was revised down to 0.5%, from a previous estimate of 0.6%.

 

• The annual rate of wage growth held at 2.1% in the March quarter, for the third consecutive quarter. This followed four quarters of annual growth at a record low of 1.9% from the September quarter 2016, to the June quarter 2017.

 

• Despite the creation of 367k new jobs in the year to March, wage growth remains weak. The slow pace of wages growth was broad-based across industries and States. Annual wage growth was at or below 2.7% in all industries and States in the June quarter.

 

• Last week’s Federal Budget for 2018-19 forecast wages growth of 2.25% in 2017-18, rising to 3.50% in 2020-21. In our Budget Report we noted the wage forecasts from 2018-19 may not come to fruition. Today’s wages update also casts some doubt on the likelihood of achieving the Budget wage forecast for the current financial year.

 

Please see the attached report for more information.

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