Free Trial

REPEAT: MNI ANALYSIS: Australia Q3 Wages Subdued, MonPol Risk

Repeats Story Initially Transmitted at 00:57 GMT Nov 15/19:57 EST Nov 14
     SYDNEY (MNI) - Australia's wage price index rose less than expected in the
third quarter, raising concerns that wage growth could remain subdued for longer
and keep the Reserve Bank of Australia's monetary policy on hold for an extended
period.
     Data published by the Australian Bureau of Statistics showed wage price
index rose 0.5% q/q, lower than MNI survey median forecast for +0.7%. The y/y
wage pace rose to +2.0% but was also short of expectations for a 2.2% increase.
     Subdued wage growth is one of RBA's top concerns because until household
incomes rise, the outlook for household consumption cannot improve
significantly. This outlook is the key reason why the RBA doesn't expect
underlying inflation to rise above the lower band of its target band even by the
end of its current forecasting period in December 2019.
     The RBA's SOMP forecast and commentary both pointed to a central bank
that's likely to remain on hold for longer, with the risk of easing still not
negligible. The wage price data have only increased the downside risks to
monetary policy.
     Wage growth remained subdued despite the impact of a rise in the minimum
wage. ABS Chief Economist Bruce Hockman said: "Annual wages growth increased
marginally to 2.0 per cent in the September quarter 2017. The higher wage growth
in the September quarter was driven by enterprise agreement increases, end of
financial year wage reviews and the Fair Work Commission's annual minimum wage
review." 
     In original terms, wage growth accelerated to +0.8% in the private sector
in Q3 from +0.4% in Q4, but the y/y pace remained unchanged at +1.9%.
     The mining sector recorded the lowest wage price rise, up 0.2% q/q and 1/2%
y/y. Wages in the retail sector accelerated to +0.9% q/q in Q3 from +0.1% in Q2,
while construction also saw an acceleration to +0.6% from +0.3%.
     From Wage Price Index for the third quarter published by the Australian
Bureau of Statistics on Wednesday:
                                            Q3                            Q3
----------------------------------------------------------------------------
                  (Q/Q %, seasonally adjusted)  (Y/Y %, seasonally adjusted)
Wage-Price Index                          +0.5                          +2.0
MNI Median                                +0.7                          +2.2
                          (Range +0.5 to +0.8)          (Range +2.0 to +2.3)
Private Sector                            +0.5                          +1.9
Public Sector                             +0.5                          +2.4
--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com
[TOPICS: MTABLE]

To read the full story

Close

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.
}); window.REBELMOUSE_ACTIVE_TASKS_QUEUE.push(function(){ window.dataLayer.push({ 'event' : 'logedout', 'loggedOut' : 'loggedOut' }); });