MNI BRIEF: RBA On Track for 25bp As Wage Rises Hit Decade High
The Reserve Bank of Australia appears set to deliver another 25bp hike at its December meeting as yearly wage growth rose to a 10-year high, finally hitting the level identified by policymakers as consistent with its 2-3% inflation target.
RBA officials have repeatedly nominated 3-4% nominal wage growth as consistent with the Bank's 2-3% inflation target, with the September quarter Wage Price Index rising 1% q/q and 3.1% y/y in the September quarter, according to Australian Bureau of Statistics data released on Tuesday. The quickening of wage growth reflected an increase in award wages of between 4.6% and 5.2%. (See MNI Insight: RBA Still Wants Wages Growth, Just Not Too Much)
Private sector wage growth was the standout, with wages up 1.2% q/q, or 3.4% y/y, as 46% of private sector jobs receiving a pay rise. Around 30% of public sector jobs received a pay rise. The WPI is expected to rise in the Q4 as a 15% pay hike for aged care workers was approved earlier this month.
Strong wages growth sharpens the focus on Thursday's release of labour force data for October. Recent data has suggested steam has come out of the tight jobs market. There were only 900 new jobs added in September compared to forecasts for 25,000 to be added. The RBA's November Statement on Monetary Policy noted wages growth was being counteracted by high inflation, rising interest rates and falling house prices.