Australian wage growth likely to stay subdued for some time

The WPI data are widely in line with market expectations and imply that wage growth is stabilizing, although at low levels. The wage price index, stripping bonuses, rose 0.5 percent sequentially and is up 1.9 percent year-on-year. The data were consistent with market expectations. However, fourth quarter reading was revised lower to 0.4 percent sequentially.

Private sector wages were up 0.5 percent sequentially that kept the annual rate of growth unchanged at 1.8 percent on an annual basis. In the meantime, public sector wages were up 0.6 percent in the quarter, seeing the annual pace rising higher to 2.4 percent year-on-year.

Wage growth appears to have stabilized throughout a number of industries and states. Wage growth in the mining sector continues to decelerate with annual wage falling to 0.6 percent year-on-year. In turn, the mining states of Western Australia and Queensland are the worst performers with overall wage growth of just 1.2 percent and 1.9 percent year-on-year respectively, noted ANZ.

Several factors continue to be a drag on wages. The continuing change towards part-time jobs and underemployment seems to be adding to weak wage outcomes. Inflation expectations stayed low, and workers continue to worry about job security.

For the Reserve Bank of Australia, the figures are widely consistent with its view that wage growth has stabilized. But, wage growth is likely to stay subdued for certain time, so the data are expected to have few implications for near-term monetary policy, added ANZ in a research report.