Australian wages grew strongly in the September quarter, according to the latest business indicators released by the Australian Bureau of Statistics on Monday.
Total wages and salaries paid jumped by 1.2% last quarter, leaving the year-on-year increase at 2.9%.
The acceleration, at odds with recent weak labour market data from the ABS — including the separate wage price index (WPI) which grew at the slowest annual pace on record in the quarter — is encouraging for Australia’s inflation outlook, says ANZ’s economics team.
“Growth in the wages bill was much stronger than the WPI and labour market numbers implied, although the Q2 result was revised down from an initially reported 0.8% to just 0.4%,” said Felicity Emmett, head of Australian economics at the ANZ.
“With employment growing at around 0.2% in the quarter, this implies a solid rebound in the GDP measure of the average wage rate in the economy.”
Essentially, while employment grew by just 0.2% over the quarter, total wages increased at six times that pace.
The divergence between the two came courtesy of an increase in hours worked which grew by 0.5%, reversing a 0.6% drop in Q2.
While a strong increase, adding to evidence that wage disinflation may ebbing following news that Australian service sector wages grew at the fastest pace in over a year last month, according to the Australian Industry Group, caution is still warranted – as touched upon by Emmett – given the ABS’s figures are prone to revision, often by some margin.
Throw in uncertainty over the ABS’ seasonally adjusted jobs figures and it reinforces the point that it’s far too early to declare the deceleration in Australian wage growth is now over.