MNI POLICY: Australia MI Survey Shows Rise In Q3 Wage Growth

By Sophia Rodrigues

     SYDNEY (MNI) - Annual wage growth in the third quarter accelerated at the

fastest rate in two years, supporting expectations of a rise in household income

and thus their consumption, and boding well for the Reserve Bank of Australia's

guidance for the next move in the cash rate to be up.

     Wage expectations for the year ahead, however, decelerated and suggest

downside risks to the RBA outlook remain, but this could change as expectations

is not necessarily a true indicator of actual outcome.

     Data published by Melbourne Institute Thursday showed annual pay growth in

Q3 rose 2.3%, matching a pace last seen in Q3 of 2016. Pay expectations for the

year ahead was 1.8%, slowing from 2.5% expected in Q2.

     Pay expectations is not necessarily a good guide to actual pay growth

because in Q3 last year, it pointed to 1.7% growth but the actual outcome in Q3

of this year was 2.3%.

     The data also showed inflation expectations on a trimmed mean basis was

unchanged at 4.0% in September. On a weighted mean basis, inflation expectations

fell slightly to 2.4% in September from 2.5% in August.

     From the Melbourne Institute Consumer Inflationary Expectations survey for

September published Thursday.

                                     September      August

----------------------------------------------------------

                                     %, Annual   %, Annual

Expected Inflation (trimmed mean)         +4.0        +4.0

Expected Inflation (weighted mean)        +2.4        +2.5

Actual Pay Growth                   +2.3% (Q3)  +1.4% (Q2)

Expected Pay Growth                 +1.8% (Q3)  +2.5% (Q2)

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

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