**MNI 5 Things: Australia Wage Growth Remains Subdued

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By Sophia Rodrigues

     SYDNEY (MNI) - Following are the five things we observed in the Q1 wage

price index data published by the Australian Bureau of Statistics Wednesday.

     --Wage price index rose 0.5% q/q in Q1, same as Q4 which was revised

downwards from +0.6%. However, wage price index for the two quarters prior to

that were each revised up to +0.6% from +0.5%. This is why the y/y index rose

2.1% y/y, the same pace as Q4. The slowing in q/q wage growth to +0.5% in the

last two quarters from +0.6% raises some doubt on whether wage growth has indeed

troughed. This was the 13th quarter in a row where y/y wage price has risen less

than the mid-point of the Reserve Bank of Australia's 2% to 3% target band. It

was the 22nd consecutive quarter where the rise was below 3.5% which RBA

Governor Philip Lowe has suggested is the ideal growth rate needed to get

inflation at the mid-point of the target band. 

     --Private sector wages grew at 1.9% y/y for three quarters in a row. This

is an acceleration from +1.8% in each of the two quarters prior to that but has

remained below 2.5% growth for 13 quarters in a row.

     --In original terms, wages in retail trade sector rose 0.2% for the second

straight quarter, and in y/y terms slowed to +1.5% from +1.8%. A lack of

acceleration in retail sector wages suggests continued competition in the sector

and raises worry on how long it would take for the downtrend in retail prices to

dissipate.

     --Construction wages slowed to +0.2% q/q from +0.6% in Q4. This indicates

there isn't yet any pressure on construction wages despite strong growth in the

industry. This would ideally be the first sector to show upward pressure on wage

growth given the large amount of infrastructure work going on. In y/y terms too,

construction wage index slowed to 1.7% from 1.9% rise in 2017, though a minor

bright spot is that it is better than 1.6% rise in 2016.

     --Wages in wholesale trade was another drag, rising 0.2% q/q for the second

straight quarter and in y/y terms slowing to +1.7% from +2.0%. The only two

sectors showing decent wage acceleration was education and training, and

healthcare and assistance. But none of the sectors showed wage price of even

3.0% y/y --  the largest was 2.7% y/y in healthcare and assistance.

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

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