Data Snapshot: Wage Price Index - The Road to Nowhere

Good afternoon,


The key points in this report are:

 

  • Wages grew at a slightly stronger-than-expected rate of 0.6% in the quarter. However, the annual growth remained muted at 2.3%, and in line with forecasts. Annual growth has held at a 2.3% for two consecutive quarters.
  • In his testimony to parliament last Friday, RBA Governor Lowe said that he would like wage growth to have a ‘3’ in front. Today’s data provides evidence that the pace of wage growth remains far from what the RBA would prefer.
  • Wage growth in the June quarter was boosted by Victorian public sector wages in the healthcare sector. The boost drove public sector wages up 0.8% in the quarter, the strongest quarterly increase in five years.  However, the underlying story of weak wage growth remains unchanged. Private sector wage growth eased from an annual rate of 2.4% in the March quarter to 2.3% in the June quarter. 
  • Wage growth across most industries remained well-contained. The standout was healthcare & social assistance, where annual job growth accelerated from 3.0% in the March quarter to 3.3% in the June quarter, the strongest in six years.
  • The growing signals that employment growth will slow point to the spare capacity in the labour market persisting for some time. It also suggests limited prospects for wage growth to pick up in a meaningful way. Indeed, we have been highlighting for some time that the risk is that the unemployment rate rises which further lessens the likelihood for stronger growth in wages. With this outlook for ongoing weak wage growth, inflation is likely to remain below the RBA’s 2 to 3 per cent target band for some time.

 

Please see the attached report for more information.



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RBA Minutes of the September &hellip