ANZ: Only A Slight Rise In Q2 Australian Wage Growth

ANZ note that “the Wage Price Index (WPI) for Q2 printed in line with our expectations at +0.7% Q/Q (2.6% Y/Y). On this measure, the wage response is still quite weak in the face of the 40-year low in labour underutilisation and record high difficulty finding labour. The Q2 print was also in line with the RBA’s forecast. But ahead of their September meeting, we think they will put more weight on their business liaison program, which shows more than 60% of firms plan to pass on annual wage increases above 3% in the year ahead. As such, we think another 50bp cash rate hike in September is the most likely scenario.”