Wages growth has peaked, misses expectations

Wages growth on the way back down

Labour market conditions are easing, with online job advertisements falling a further -3.2 per cent in April, to be -18.1 per cent lower over the year.

The latest wages figures from the ABS were also a slight miss on market expectations. 

Public sector wages growth pulled back to just +0.46 per cent in the March 2024 quarter (from a massive +1.41 per per cent in the September quarter), taking annual growth for the public sector down from +4.27 per cent in December to +3.75 per cent in March. 

For the private sector wages growth was +0.8 per cent in the March quarter taking annual growth down from +4.2 per cent to +4.1 per cent. 

At the state level only Tasmania is still firing.

Tassie saw quarterly wages growth leaping +1.6 per cent, taking annual wage price growth all the way up to +4.9 per cent for the Emerald Isle.  

Everywhere else is now seeing wages growth slowing. 

Over the year the slowest wages growth was seen in Victoria (+3.6 per cent), and in Canberra, where the changes for the public sector saw annual growth down to +3.2 per cent.

Most importantly, over the quarter wages growth of +0.81 per cent somewhat undershot market expectations of +0.9 per cent, taking year-on-year growth down slightly to +4.1 per cent.

Wages growth including bonuses was a tad stronger, but overall wages growth looks set to be slightly weaker than Reserve Bank forecasts. 

Weaker growth for wages ahead

There's been some distortion over the past year, with large changes in enterprise bargaining agreements in 2023, but far fewer public sector roles experiencing pay reviews in the March quarter. 

Public sector wages growth was partly lower due to the distorting base effect from an outsized previous result. 

From the new financial year the growth in award wages is likely to be significantly slower.

Overall, this was a bit of a softer result, and with immigration still rampaging along taking the Aussie estimated resident population through 27¼ million later this morning, the outlook is almost certainly for softer wages growth ahead.  

James Foster ran through all the key details in a more grown-up fashion here. 

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