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

MNI (London)
     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
     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
     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:
[TOPICS: M$A$$$,M$L$$$]
MNI London Bureau | +44 203-865-3812 |
MNI London Bureau | +44 203-865-3812 |

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