Eyes on jobs data as wage growth stalls

Alex Druce
(Australian Associated Press)


Wage growth in Australia remains flat, with a 0.5 per cent lift for the March quarter undershooting expectations and adding further weight to the case for a rate cut.

Total hourly rates of pay for the three months to March was unchanged from the December quarter, according to Wednesday’s seasonally adjusted data from the Australian Bureau of Statistics, falling short of a 0.6 per cent consensus rise.

Analysts say the “disappointing” release is the latest evidence the nation’s robust labour market has not been enough to lift employees’ pay, spending, or inflation.

The data also comes a day ahead of jobs figures that are regarded as central to whether the Reserve Bank will cut the cash rate from a historic low of 1.5 per cent in a bid to boost economic growth.

BIS Oxford chief economist Sarah Hunter said continued job market strength could stay the RBA’s hand for the near-term, but added that Wednesday’s wages update had dialled up the pressure.

“Given their focus on the labour market and its recent strong performance we don’t expect them to cut at their next meeting in June, but it’s looking increasingly likely that cash rate cuts will materialise in the second half of the year,” Ms Hunter said.

Ms Hunter said there remained very little upward pressure on wages in the labour market.

“With employment growth set to slow as the residential construction downturn really starts to bite, momentum in wages is unlikely to pick up until well into the 2020s,” she said.

A 2.3 per cent growth in wages for the 12 months to March 31 matched expectations, but the year-on-year figure has now been stagnant for three consecutive quarters.

Private sector wages rose 0.5 per cent for the March quarter, and the public sector index rose 0.4 per cent.

Construction and retail wages continue to lag behind while healthcare, utilities, and other public-sector related industries – where employment growth has been strongest – are leading the way.

APAC economist at jobs site Indeed, Callam Pickering, said the RBA would view Wednesday’s wages data as neutral, though the central bank would already have an eye on the labour force data for April.

“(The Reserve Bank is) naturally disappointed that wage growth isn’t improving at a faster clip … but they could hardly be surprised given the terribly disappointing inflation figures for the March quarter,” he said.

“Right now their primary focus appears to be employment and the unemployment rate, so all eyes will be on the data released tomorrow.”

Economists expect the jobless rate to tick up to 5.1 per cent for April, with about 15,000 new jobs created in the month.


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