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of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
AUSTRALIA DATA
After two straight quarters of growth, productivity improvements stalled in Q1. GDP per hour worked was flat on the quarter and compared to a year ago but that was up on Q4’s -0.4% y/y. Hours worked were flat and real GDP rose 0.1% q/q. RBA Governor Bullock reminded us today that productivity is volatile and difficult to measure and so it is important to look at it over time. It remains soft but should trend higher. The RBA is forecasting it to rise 1.8% y/y in Q2.
- Unchanged productivity and wage growth around 4% are not consistent with the RBA’s inflation target and it stated at its May meeting that wage growth is “above the level that can be sustained given trend productivity growth”.
- Hours worked were flat on the quarter but have slowed to +0.9% y/y from 2% and that slowdown is likely to continue.
- Another problem with poor productivity is that it adds to unit labour cost (ULC) growth, which adds price pressures. Q1 rose only 0.5% q/q though to be up 5.8% y/y after 1.1% and 6.7% in Q4. They remain elevated but are off recent highs helped by moderating employee compensation growth.
- Assuming hours worked fall over 2024 and then return to trend growth by H2 2025, productivity should improve each quarter to end-2025 resulting in ULC growth moderating to just over 1% by Q1 2025 before returning to 2%.
Australia productivity vs ULC y/y% with scenario
Source: MNI - Market News/ABS
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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