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Australian wage growth rises below expectations in Q4 2018, likely to improve gradually

Australian wage growth came in slightly below expectations in the fourth quarter, leaving the annual growth rate stable at 2.3 percent year-on-year. The weaker figure implies that the pass through from the earlier minimum wage rise was not as large as anticipated.

The wage price index rose 0.5 percent quarterly and was up 2.3 percent year-on-year in the fourth quarter, disappointing market expectations and decelerating from the third quarter. Although it was a solid 0.5 percent, rising 0.54 percent. Public sector growth decelerated to 0.6, and private sector was stable at 0.6 percent. On a year-on-year basis public sector growth decelerated to 2.5 percent and private sector rebounded to 2.3 percent. Public sector wages, including bonuses, rose 2.5 percent year-on-year and private sector wages were stable at 2.8 percent year-on-year.

Throughout industries, information media and telecommunication recorded the slowest wage growth, at 1.6 percent, followed by mining at 1.8 percent. Annual wage growth accelerated in ten sectors and decelerated in eight. Arts and recreation had the best improvement, at 2.7 percent. Retail trade recovered to 2 percent and financial and insurance services rose 2.4 percent.

Western Australia’s wage growth continued to be the softest at 1.6 percent year-on-year. The Northern Territory recorded a significant acceleration to 2.2 percent. Victoria saw the fastest wage growth of 2.7 percent, whereas New South Wales recorded a growth of 2.4 percent. Queensland and South Australia both recorded a rise of 2.3 percent. Tasmania was stable at 2.6 percent, while the ACT decelerated to 2 percent.

“The slightly disappointing WPI headline number won’t be enough to change the RBA’s outlook for the labour market. With labour force underutilisation falling, wage growth is still expected to improve, gradually. For the RBA to shift its tone from neutral to negative would require a sustained deterioration in labour market indicators”, said ANZ in a research report.

At 11:00 GMT the FxWirePro's Hourly Strength Index of Australian Dollar was bullish at 94.4508, while the FxWirePro's Hourly Strength Index of US Dollar was slightly bearish at -67.7826 more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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