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MNI INTERVIEW: Australia Wage Growth Returning to Normal: ABS

MNI (Sydney)
(MNI) Sydney

Australia's wage price index outpaced underlying inflation in the third quarter, indicating a return to pre-pandemic patterns of wages growth, an Australian Bureau of Statistics official told MNI Wednesday.

Michelle Marquardt, Program Manager of the Prices Branch at the ABS said the survey results showed that after adopting special measures to operate through the pandemic, Australian wages growth was now "seeing a return to normal."

This includes a higher number of private sector workers having discussions with employers on wage increases, although the public sector was also seeing some uptick as freezes come to an end.

"For the last few quarters it has been the private sector which has had higher wage rises than the public sector," which, historically "is a bit unusual," said Marquardt.

"The public sector has been affected by a lot of wage freezes over the past year or so, and that has had an impact," said Marquardt. "But many of those freezes have passed now at Commonwealth and State level."

Private sector wage growth is running at an annualised 2.4%, while for the public sector growth is at 1.7%, the first growth in over a year after slowing for each quarter since March 2020.

RBA WATCHING

Higher wages are key to the Reserve Bank of Australia''s inflation outlook, with Governor Philip Lowe saying recently the central bank believes income growth needs to be at 3% and just above to drive trimmed mean inflation sustainably into the target range, prompting conditions for an interest rate rise.

Lowe said that the inflation outlook had some uncertainty, and that a rate rise could come late in 2023 if inflation had momentum, or in 2024, as the bank has been guiding for the last year.

The ABS today reported wages grew by a seasonally adjusted 0.6% in Q3, or an for annualized rate of 2.2%.

This compares with underlying Q3 inflation which printed at a higher than expected 2.1%, sitting in the RBA's target range of 2% to 3% for the first time in more than five years.

MNI Sydney Bureau | +61-405-322-399 | lachlan.colquhoun.ext@marketnews.com
MNI Sydney Bureau | +61-405-322-399 | lachlan.colquhoun.ext@marketnews.com

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