Australia Q2 Y/Y Wage Growth At Record Low For 4th Qtr In Row

--Mining Wages Rise 0.8% Q/Q, First Significant Increase in Several Quarters

     SYDNEY (MNI) - Wage-Price Index for the second quarter published by the

Australian Bureau of Statistics on Wednesday:

                                            Q2                            Q2

----------------------------------------------------------------------------

                  (Q/Q %, seasonally adjusted)  (Y/Y %, seasonally adjusted)

Wage-Price Index                          +0.5                          +1.9

MNI Median                                +0.5                          +1.9

                          (Range +0.5 to +0.6)          (Range +1.9 to +2.0)

Private Sector                            +0.4                          +1.8

Public Sector                             +0.6                          +2.4

     FACTORS: Nominal (non-inflation adjusted) wage growth slowed on a

quarter-on-quarter basis in the second quarter following an upward revision in

the first quarter. In year-on-year terms the growth remained at a record low for

the fourth quarter in a row. In the latest quarter, private sector wages grew

0.4% q/q, slowing from a 0.5% gain in Q1 while public sector wages rose 0.6%,

the same pace as Q1. 

     In original terms, both private and public sector wages rose 0.4% q/q in

Q1, and grew at an overall rate of 0.4% q/q for the third quarter in a row.

Among sectors, the biggest surprise was a 0.8% q/q rise in mining wage growth in

the private sector as some employees received their first wage increases in

several years. Retail sector wages rose just 0.1% q/q, slowing from the 0.4%

rise in Q1 and well below the 1.1% rise in the third quarter of 2016. Wage

growth in accommodation and food services was flat q/q after a 0.2% q/q increase

in each of the two prior quarters.

     TAKEAWAY: The outcome matched MNI survey median forecasts. It was also in

line with the Reserve Bank of Australia's forecast that wage growth would remain

subdued, but increase gradually over the forecast period as labor market

conditions continue to improve. The RBA expects an increase in minimum and award

wages announced by the Fair Work Commission to add somewhat to wage growth in

the third quarter. 

     Based on the experience of some developed economies that are already close

to full employment, the RBA is alert to the risk that declining spare capacity

might take some time to flow through to wage and thus price inflation. On the

other hand, the RBA thinks inflationary pressures could instead emerge more

quickly if workers seek to "catch up" after a long period of low wage growth.

--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com

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