Australia - Q3 Wage Price Index due today

Wages growth lower than expected nationally despite reviews and minimum pay call

The rise in the national Minimum Wage has an impact in the September quarter Wage Price Index. The Bank has expressed confidence on a number of occasions that wage growth would improve, but that confidence will be tested by the weakness apparent in these numbers.

Workers are still getting used to the "new black" of wages growth, which is running at just two per cent a year, a leading economist says.

In the public sector, public administration and safety had the strongest quarterly growth of 1.2 per cent, while workers in electricity, gas and water were among those with the lowest increase of 0.5 per cent.

Across the nation, wages grew by 0.5 per cent quarter on quarter for a year on year increase of 2 per cent.

While some commentary had forecast a substantial increase in wage growth, thanks to the July increase in minimum wages, only a slight uptick was recorded in the September quarter. Private sector wages rose by a more modest 1.9 per cent. Those for private sector workers increased by a larger 0.54%.

"Western Australia recorded the lowest through the year wage growth of 1.3% and Victoria, Queensland and Tasmania the highest of 2.2%".

In original terms, through the year wage growth to the September quarter 2017 ranged from 1.2 per cent for the Mining industry to 2.7 per cent for Health care and social assistance and Arts and recreation services.

Callum Pickering, APAC economist at Indeed, said today's report makes it hard to justify the need for higher interest rates in Australia. Ongoing very-low wage growth and its implications for both the consumption and inflation trajectory suggest that monetary policy is likely to remain stimulatory for some time.

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