Australian wage growth created a new record and it’s not the sort of record employees wish to see. If inflation did pick up in Australia, it seems unlikely employee costs would be behind it as wages growth set a new record low in the September quarter. Although the series has only be around since 1997 it is still the lowest in twenty years.
Wages grew by 0.4% in the September quarter, which is the same as the June quarter’s figure. However, year on year growth fell to 1.9%, down from 2.0%, and if quarterly growth figures continue at the current pace, annual figures will fall further. Markets largely took the figures for granted and in any case, they are being driven by offshore bond markets where the Trump factor still features prominently. The yield implied by 10 year bond futures fell from 2.63% to 2.61% while the yield on 3 year bonds fell a similar amount to 1.81%.
Falling wages inflation in Australia is being driven predominately by the private sector. Westpac’s Justin Smirk said, “Low and stable private sector wage inflation has been the dominant domestic underlying inflation story for a number of years now.” Private sector wages grew by 0.4% in September or 1.9% year on year while the public sector continued to be a more rewarding place for employees and, in that part of the labour market, wages grew by 0.6% or 2.3% for the year.
