Pete Wargent blogspot

CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

'Must-read, must-follow, one of the finest property analysts in Australia' - Stephen Koukoulas, ex-Senior Economics Adviser to Prime Minister Gillard.

'One of Australia's brightest financial minds, must-follow for in-depth analysis' - David Scutt, Business Insider.

"I've been investing 40 years yet I still learned new concepts; one of the finest young commentators" - Michael Yardney, Amazon #1 bestseller.

'The most knowledgeable person on Aussie real estate - loads of good data & charts, the most comprehensive analyst I follow in Australia...follow Pete Wargent' - Jonathan Tepper, Variant Perception, 2 x NYT bestseller.

'Superlative work' - Grant Williams, founder RealVision.

Wednesday, 18 May 2016

Wages growth slows to a crawl

Wages sluggish

Is it time to get ready for even weaker non-tradables inflation and even lower interest rates? It could be.

The ABS Wage Price Index for Q1 2016 recorded wages growing by just +0.4 per cent in the first quarter, and by +2.1 per cent over the year. 


Private sector wages growth has slowed to a crawl at just +1.9 per cent, while wage price growth in the public sector was +2.5 per cent.


State versus state

Since 1997, the strongest wage price growth has been experienced in Western Australia, and the weakest in Tasmania. 


As for the states and territories that are driving soft wages growth lately? Not to put too fine a point on it, it's all of them.


Industry groups

Mining and construction wages growth has softened considerably, although real estate agents were the worst faring industry group year-on-year. 


Meanwhile the ongoing rotation in employment from higher paying mining sector into other industries could potentially result in even weaker price pressures than implied by the headline result.

Recall from my recent post here that non-tradables inflation - which is often taken to be a reasonable proxy for domestic price pressures - fell to its lowest annual reading since some seventeen years ago in June 1999.

The wrap

Overall a soft headline result, though not entirely unexpected (it was forecast accurately by Westpac, 

AMP Capital joined other forecasters in predicting two further interest rate cuts to a cash rate of 1.25 per cent.