Originally published by AMP Capital
- June quarter wages rose 0.5% quarter on quarter in Australia or 1.9% year on year. This was in line with market expectations.
- Private sector wages rose just 0.4% qoq or 1.8% yoy and public sector wages rose 0.6% qoq and 2.4% yoy.
- By state wages growth is strongest in South Australia and the Northern Territory at 2.1% yoy, followed by NSW, Victoria and Tasmania at 2% yoy, Queensland and the ACT at 1.9% yoy and Western Australia at just 1.4% yoy as the mining investment slump continues to impact there.
- By industry wages growth is strongest in health care at 2.6% yoy and education at 2.4% yoy and weakest in mining at just 1.1% yoy.
While the decline in wages growth appears to have stabilised at around 1.9% yoy, this is still a record low in terms of the history of the Wage Price Index and means that real wages growth is zero. While the weakness in mining employment is clearly dragging down wages growth in WA, average wages growth in the other states at 2% year on year is continuing to be depressed by worker insecurity, high levels of underemployment and depressed inflation expectations.
Implications
Continuing very low wages growth will constrain consumer spending and inflation and means that the RBA will have to keep official interest rates at very low levels for some time yet. We don’t expect an RBA rate hike until late next year at the earliest.