In a week when we’re about to receive important data on the labour market, including updated figures on hourly wage growth and average weekly earnings, we’ve just received some mixed news on wage trends in Australia.
According to jobs website Seek, growth in average advertised salaries remained fairly weak in the year to June, although there are signs that recent strength in hiring levels is leading to a pickup in wage pressures.
Over the year, the average advertised annual salary on SEEK rose to $81,747, up 1.8% on a year earlier.
“During the past financial year, advertised salaries on SEEK were relatively flat, with little to no growth, but in June this year salaries started to tick higher after dipping in May,” said Kendra Banks, a spokesperson at Seek.
“This improvement is very encouraging, especially since salaries fell sharply in 2012 to early 2014″, she added, noting much of the decline during this period was driven by falling salary levels in Australia’s mining sector.
However, as seen in the table below, supplied by Seek, Western Australia, the Northern Territory, South Australia and Queensland — Australia’s mining states and territories — all saw average advertised salaries increase faster than the national average over the last financial year, mirroring a strong rebound in commodity prices over the same period.
Outside of those states and territories, salary growth in Victoria and Tasmania also grew at a decent clip, rising 2.4% and 2.8% respectively.
However, the news was more mixed for New South Wales — Australia’s most populous state — where average advertised salary rates rose by just 1.2% over the year.
Canberra, home to the nation’s highest average salary levels, also grew by just 1.1% .
Given both NSW and the ACT have unemployment rates significantly lower than other parts of the country, the weakness in salary growth casts some doubt over whether the strength in other states and territories can be maintained, especially should commodity prices weaken once again.
Markets will get further clarification on the trend in wage rates and average weekly earnings across the country over the coming days.
On Wednesday, the ABS will release its June quarter Wage price index (WPI). Average hourly wage rates are tipped to increase by 0.5%, leaving the annual rate unchanged at a record-low level of 1.9%.
That release will be followed a day later by a semi-annual report on average weekly earnings, a snapshot that takes into account both hourly wage rates and the number of hours worked.
According to economists at the National Australia Bank, the performance from NSW may go someway to determining the outlook for wage growth across the broader Australian economy in the years ahead.
“New South Wales is arguably already close to full employment, with an unemployment rate of 4.8%,” the NAB said.
“Investors should therefore be watching developments in the state first for evidence as to the extent of any cyclical improvement in wage growth in the coming years.”