Q1 Wage Growth Slumps Below Forecasts
Latest numbers from the ABS reveals Australian wages jumped 0.5% [seasonally adjusted] in Q1, notching a 2.1% year-on-year increase.
Despite a rise in job openings, wage growth continues to remain relatively flat across the nation.
In a CFO Forum speech, RBA Deputy Governor, Guy Debelle, warns Australian wage growth may increase slower than previously expected:
“The experience of other countries with labour markets closer to full capacity than Australia’s, is that wages growth may remain lower than historical experience would suggest.”
The news comes as the RBA continues to express the risks of low wage growth in a time of rising household debt.
“There is a risk it may take a lower unemployment rate than we currently expect, to generate a sustained move higher [in wages growth],” asserts Debelle.
Significant increases in local job participation have prevented a decrease in the national unemployment rate. Capacity in Australia’s job market also remains elevated.
Over the period, private sector wages jumped 0.5%, with a 1.9% YoY increase. Public sector wages increased 0.5% in Q1, jumping 2.3% YoY.
Following the ABS’ data release, the Australian dollar dropped from 74.75 US cents to US74.53 cents.
Consensus is, the RBA will keep interest rates near historic lows until 2019, or later.