MNI 5 THINGS: Australian Wage Price Index Expected At 2.3% Y/Y

     SYDNEY (MNI) - Australia's Wage Price Index is expected to show growth of

0.6% for the third quarter and 2.3% year-on-year through September when data is

released Wednesday.

     The index rose 0.6% q/q and 2.1 % y/y in the June quarter.

     Ahead of the Nov 14 release, we outline five themes for particular

attention.

     Forecasts in a tight range. 

     MNI consensus calculations from 16 analysts shows a low of 0.6% and a high

of 0.7% for quarterly growth, and a range of 2.2% to 2.4% for y/y growth. The

market has had a tendency to underestimate the data, as seen in five of the last

ten quarters, only overestimating once -- in the December 2017 quarter. The

other four occurrences saw the data coming in as anticipated.

     Reserve Bank of Australia watching closely. 

     Wages growth is a key factor for RBA monetary policy, with the bank waiting

for higher wages to help drive inflation sustainably into its target range of 2

to 3% before raising official interest rates, currently at a record low 1.5%.

     At anything over 2%, wages growth will outpace inflation which, according

to September quarter data is running below target at 1.9%, although the RBA said

changed funding to childcare put a one-off dampener on this quarterly outcome.

The RBA is forecasting that wages' growth will pick up from current sluggish

levels and help fuel inflation, creating the environment for a change in policy

in 2019.

     Close to full employment. 

     The unemployment rate has been declining steadily and came in at 5.0 % in

September. The rate held steady at 5.5 % all through 2017 but began to fall from

May 2018. The RBA is expecting further falls to around 4.5%, which will in turn

help create the upward pressure on wages and inflation the Bank is looking for.

     Private sector lags. 

     Wages growth in the public sector is outpacing that in the private sector,

which provides just under 90% of all employment in Australia. The June quarter

showed public sector wages increased 2.4% y/y against 2.0% in the private

sector.

     Healthcare, education and public administration sectors are leading. 

     These three sectors all recorded wages growth above 2% in the June quarter

y/y, with healthcare wages up 2.7%, a high across all industries. Mining

industry wages growth is sluggish at 1.3% y/y, although there were signs of a

revival in the June quarter, where the quarterly comparison showed above average

growth of 0.6%.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

[TOPICS: M$A$$$,M$L$$$]