Each quarter the Australian Bureau of Statistics (ABS) surveys around 3000 enterprises regarding a sample of jobs in each workplace to measure changes in the price of labour across around 18000 jobs. The results are used to construct a wage price index (WPI). Changes in the WPI over time provide a measure of changes in wages and salaries independently of changes in the quality or quantity of work performed.
According to the latest wage price index (WPI) figures published by the ABS, hourly wages grew by 0.6% in the December quarter, up from the 0.5% increase in the September quarter and above the market’s expectations of a 0.5% increase. The year-on-year growth rate remained unchanged at 2.1% (after revisions) which makes this the second quarter in which the annual growth rate has not fallen. It is, however, still barely just above the lowest growth rate since the beginning of the series in 1999.
Financial markets reacted to the wage figures by sending yields and the AUD lower. The local bond market ignored overnight leads from offshore and 3-year bond yields finished the day 3bps lower at 2.15% while 10-year bond yields fell 4bps to finish at 2.86%. The AUD fell around 0.8 U.S. cents to 78.00 U.S. cents, although it is worth noting the USD strengthened against the euro and the yen on the same day.
Public sector hourly wage growth has continued to outstrip its private sector counterpart. Public sector hourly wages grew by 0.6% over the quarter while the growth rate in the private sector was 0.5%. On an annual basis, public sector hourly pay maintained its 2.4% growth rate while the comparable figures for the private sector remained at 1.9%.