Wages growth trawls along the bottom

Private sector wages stall

The wage price index increased by just +0.2 per cent in the June 2020 quarter, and by just +1.8 per cent over the year.

Both figures were series lows.

Public sector wage prices increased by +0.6 per cent in Q2, but private sector wages were almost flat at just +0.1 per cent.

With the economy virtually taken offline, this can't be too much of a surprise. 

The highest annual result for the wage price index was +2.4 per cent in South Australia and Tasmania, with Western Australia bringing up the rear at +1.6 per cent.

With China having reopened and now powering ahead now things are looking up for Western Australia, with iron ore prices having boomed.

Wrong side of the boat

After some years of low inflation and low wages growth most people have become convinced that things will stay this way for a long time.

But there's another very possible scenario given that central banks have been creating money like fury, and with governments having stumped up for so many workers to be furloughed. 

Inflation expectations could now rise, with struggling businesses ratcheting up their fees to make up for lost ground.

Lower immigration could also mean that eventually businesses have to pay higher wages to bring people back into the workforce, and to secure the necessary skills. 

Budget deficits have blown out so far that it may well take years for the workforce and economy to be weaned off the stimulus measures.

We could quite conceivably end up with a situation where there is a high rate of underutilisation, but also stronger wages growth at the same time. 

Everyone seems to be on the other side of the boat at the moment, but a whipsaw rebound in inflation could be one thing to watch over the period ahead. 

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As ever more there's much more detail from data king James Foster here.