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MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
AUSTRALIA
The Q2 data is unlikely to reassure the RBA regarding the productivity/unit labour cost (ULC) situation. Productivity deteriorated 0.8% q/q to be up only 0.4% y/y, driven by favourable base effects but still below the RBA’s August forecast. ULC costs rose 1.2% q/q to be up 5.4% y/y, only 0.2pp below Q1. Wages growth is “still above the level that can be sustained given trend productivity growth.”
- With hours worked rising 1% q/q in Q2, growth was too weak to drive a pickup in productivity. Assuming hours worked are soft over the coming year, productivity growth should reach the 1% trend by early 2025 and ULC growth should moderate to around 1% too using the RBA’s WPI and GDP forecasts.
- If hours worked contract for the next four quarters, with all other assumptions unchanged, then productivity growth would rise to around 2% y/y by Q1 2025 driving ULC growth to zero by mid-2025.
Australia productivity vs ULC y/y% with scenario
Source: MNI - Market News/ABS
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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