Pay rates in Australian finance are growing nicely while everyone else is getting hosed

Image: AMC

Australian wages growth is even slower than everyone thought, coming in a 2.2% this week when almost all economists were expecting 2.3%.

Sure, it’s a miss by only a tenth of one per cent but it’s more soft data on a metric that affects every worker in the amount that hits their bank account regularly from their employer.

Goldman Sachs, which is predicting two rate cuts from the RBA this year, noted that the weakness in wages highlight “the risks to a sustained recovery in consumption (as forecast by us and the RBA), particularly in an environment where consumer sentiment is fragile and asset prices remain under pressure… Overall, these data suggest there is still a fair degree of spare capacity in the broader economy, which presents downside risk to inflation over the coming months.”

With core inflation running at 2.00%, the aggregate result is Australian workers are becoming no better off and building no increased buying power.

The chart below shows the weakness in wages growth across the board.

The standout sector is finance, where wages are growing at closer to 3%. The good news is that retail – the biggest employment sector in the country – is also doing OK, as is education.

Via Goldman Sachs research

But growth is simply terrible in professional services, administration, mining and, perhaps somewhat surprisingly, given the building boom, construction.

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