Annette Beacher, Chief Asia-Pacific Macro Strategist at TD Securities, notes that Australia’s Q3 Wage Price Index (WPI) expanded by +0.6%/q and 2.3%/y as widely expected.
Key Quotes
“Wage inflation continues to improve, but at a glacial pace. The cyclical low was 1.9%/y nearly two years ago.”
“Wages are grinding higher along with the slowly tightening labour market, improving bonus payments and favourable enterprise agreements (EA), and keeping ahead of inflation.”
“The RBA expects above-trend growth to shrink labour market spare capacity and boost wages growth in due course. However, as the Bank’s soft target is 3%/y wages growth, and as discussed in our preview, we drop our May 2019 hike, leaving an on-consensus November 2019 25bp hike to 1.75%.”
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