Later this morning the Australian Bureau of Statistics (ABS) will release its March quarter wage price index, a report that measures the average change in wage and salary levels in Australia’s labour market.
While not traditionally a market mover, let alone a household name, that all looks set to change today given its relevance to inflation expectations, something that markets are watching closely given the outlook for interest rates.
Here’s the state of play.
- In the final three months of 2015 the index grew by 0.5% after seasonal adjustments, leaving the annual increase at 2.16%, the lowest level seen since the survey first began in 1998.
- Given the limitations of the data, it is likely that wages grew at levels not seen since at least the early 1990s recession.
- Wages growth in the private sector, the largest employer in the country, rose by 0.5% for the quarter, leaving the annual change at just 2.0%, also a record low.
- While the quarterly increase for private sector workers was matched by those in the public service, the annual rate for these workers was considerably stronger, rising 2.6%.
- Over the year workers in Victoria and the Northern Territory saw their wages increase by 2.4%, the fastest in the country. Bringing up the rear, workers in the ACT received an average wage increase of just 1.6%, the lowest of all states and territories.
- Without seasonal adjustments, wages for financial and insurance workers recorded the fastest quarterly growth rate of all industries at 1.1%. At 2.8%, workers in this sector also enjoyed the fastest annual increase of all industries surveyed.
- At the other end of the spectrum, wages for administrative and support services workers grew by just 0.1% from the September quarter, leaving the annual rate at 1.4%, equal with the mining sector.
- Looking ahead to the March quarter report, economists expect wage inflation to hold around prior levels.
- In a survey conducted by Bloomberg, the median economist forecast is for a quarterly increase of 0.5%, something that would leave annual wage growth at 2.2% if realised.
- Westpac is one of the few predicting further downside for the index, forecasting a quarterly growth rate of just 0.4%.
- In a research note released earlier this week, Westpac’s chief economist, Bill Evans, noted that an 0.4% increase would “certainly unnerve the authorities”.
- While an at-or-below forecast increase will not provide a slam dunk case for the RBA to follow up May’s rate cut with another in June, it will do little to dispel the notion that a further rate cut, most likely in August, is likely to be forthcoming.
The report is scheduled for release at 11.30am AEST.
Business Insider will have full coverage as soon as the data drops.