**MNI 5 Things: Australia Wage Growth Softens In Retail

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By Sophia Rodrigues

     SYDNEY (MNI) - Following are the five things we observed in the Q2 wage

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

     --Wage price index rose 0.6% q/q in Q2, matching the pace last seen in Q4

of last year. The y/y pace accelerated to 2.1%, from 2.0% in Q1 which was a

downward revision from 2.1% originally reported. Both the q/q and y/y outcomes

matched MNI median forecast. Private sector wages grew at 2.0% y/y in Q2, the

fastest since a similar pace was recorded in Q2 of 2016. Public sector wages

rose 2.4% y/y, the same pace as the previous give quarters.

     --The key detail in the release that has an implication for the Reserve

Bank of Australia's monetary policy is slowing in retail industry wage growth,

which rose just 0.1% compared with 0.2% rise in Q1. In y/y terms it slowed

further to 1.5% from 1.8% last year, and 2.3% in the year before that. Wage

growth in retail was the lowest among all industries. This is a reflection of

continued competition in the retail sector which also means that prospects for

acceleration in wages is very low.

     --Construction sector wages picked up in Q2, up 0.5% q/q versus 0.2% in Q1

but this is lower than 0.6% quarterly gains seen in the two quarters prior to

Q1. Given skill shortages are more widely seen in the construction industry, it

is surprising that it still not reflected in wages growth. On the brighter side,

the 2.0% y/y growth is the highest in recent years.

     --The biggest wage growth was seen in wholesale trade, up 1.1% q/q in Q2

compared with just 0.2% in Q1. The y/y pace rose to 2.1% from 1.7% but remains

well below the mid-point of the RBA's target band.

     --Wage growth for healthcare and social assistance rose 0.3% q/q, slowing

from 0.6% q/q in Q1, and for education and training it slowed to 0.5% from 0.9%.

In y/y terms education and training recorded the highest wage growth of 2.8%,

followed by healthcare and social assistance at 2.7%, and both point to some

upward pressure on wages growth.

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

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