Wage growth stays at record low

1.Wage growth stays at record low

By Lucy Hughes Jones
Sydney
(Australian Associated Press)

Wage growth has remained at a record low for a second quarter, led by continuing fallout from the mining slowdown, but with pain across all industries and states.

Total hourly rates of pay, excluding bonuses, rose by 0.6 per cent in the June quarter, meeting market expectations.

The wage price index rose just 2.3 per cent from a year earlier, the lowest annual rise since records began in 1998.

And private sector wage growth of 2.2 per cent also hit an all-time low, the Australian Bureau of Statistics said on Wednesday.

National Australia Bank senior economist David de Garis said the sluggish pace of the past three years was driven by weakness in the resources sector.

But there’s misery across the board, with no state or industry recording annual growth above three per cent.

“WA is having the slowest growth in private sector wage of any of the states, it plays into the differences in economic performance across the country,” Mr de Garis said.

“You’ve had big slowdowns in the fly in-fly out phenomenon in the west and up through Queensland, which means a lot less people are earning those much higher salaries. That by itself is slowing things down.”

The broader economy remains relatively patchy and any growth is being driven by the eastern seaboard, with NSW and Victoria experiencing a pickup in residential construction and more upbeat retail spending, he said.

CommSec economist Savanth Sebastian said wage growth will remain relatively soft as the unemployment rate stays above six per cent.

“That’s a trend that will continue over the medium term until the economy really hits its straps,” he said.

“That’s not likely to take place until you see non-mining business investment lift substantially.”

The jobless rate unexpectedly jumped to a six-month high of 6.3 per cent in July, pushed up by a surge in the number of people looking for work.

But Mr Sebastian said the wage growth result wouldn’t worry the Reserve Bank, as it was holding just above the rate of inflation.

A spike in petrol prices lifted inflation 0.7 per cent in the June quarter for an annual rate of 1.5 per cent, well below the RBA’s two to three per cent target band.

He predicted the RBA would continue to maintain an implicit easing bias.

“The wage growth isn’t going to be a precursor to a lift in inflation by any means, so I think the Reserve Bank can rest easy on the interest rate sidelines,” he said.

0

Like This