Justin Smirk, Research Analyst at Westpac, notes that Australia’s total hourly wages ex bonuses rose by 0.6% in Q3, on par with market (and Westpac’s) expectations and resulting in a modest lift in the annual pace to 2.3%yr.
Key Quotes
“The annual pace had been between 1.9%yr and 2.1%yr since March 2016. This is despite a greater than usual increase in the minimum wage of 3.3% effective in 2017 Q3 then a further increase of 3.5% in 2018 Q3. It is somewhat surprising that these two larger than usual increases did little other than modestly lift the pace of aggregate wage inflation. The current annual pace of 2.3%yr is a three year high but still a very modest outcome.”
“In the quarter private sector wages grew 0.55%qtr and public sector wages grew 0.61%. The 0.5%qtr print for private sector wages held the annual pace at 2.1% compared to the 10 year average for private sector wage inflation of 2.8%yr.”
“Wage growth in the private sector hit a peak of 4.4%yr in mid-2008. Public sector wage growth was 0.6%qtr, on par with the average of 0.6%qtr for the previous two years, with the annual pace lifting slightly to 2.5%yr from 2.4%yr.”
“It is worth noting that a cyclical indicator of wage momentum continues to look a bit more positive. Private sector wages including bonuses lift to 2.8%yr from 2.5%yr in Q2 and 2.7%yr in Q1.”
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