Wages growth in Australia has been slowing in trend terms since 2009 and the latest figures from the ABS suggest the trend still continues. June quarter wages growth was 0.5% (seasonally adjusted) for the quarter and in line with market expectations. Seasonally adjusted year-on-year growth was 2.1% which is down from March’s comparable figure of 2.2%
Private sector wages grew at the lowest rate since the data series began in September 1998 for the third quarter in a row. Seasonally adjusted private sector wages growth for the year to June 2016 has stabilised at 2.0% while the public sector figure of fell from 2.5% to 2.4%.
Western Australia is the standout state for two reasons. In the private sector, the state had the lowest annual increase in wages of any Australian state at 1.6%. However, in the public sector, the 3.0% recorded was the highest rate in the country.
RBC strategist Michael Turner expects wage inflation to continue falling. “Firstly, the rate of labour force underutilisation remains high, which will continue to dampen any wage pressure. Secondly, headline inflation has fallen further, which creates a low starting point for a lot of wage claims and will also weigh on inflation expectations.”
