Wages disappoint, again
Australia's wage price index does have a bit of a history of disappointing expectations, it must be said, and it didn't fail to disappoint again this quarter!
After missing market expectations with 0.8 per cent wage price growth in the June 2024 quarter, the index again missed median market expectations in increasing by a seasonally adjusted 0.8 per cent in the September quarter as well.
Over the past 5 quarters, the wage price pressures have ebbed away...
Over the year, wage price growth slowed from 4.1 per cent last quarter to 3½ per cent in the September quarter, and we're heading down to around 3¼ per cent in due course.
This is the first time annual wage price growth has been below 4 per cent since the June quarter of 2023.
The ABS reported that the softening has in part been related to the Fair Work Commission Annual Wage Review decision, which directly impacts pay increases across many roles:
"The latest decision of a 3.75 per cent wage increase paid from 1 July 2024 was lower than the September quarter 2023 increase of 5.75 per cent.
It was also lower than the Commission’s September quarter 2022 awarded increase of between 4.6 per cent and 5.2 per cent".
Public sector wages growth dropped from 3.9 per cent to 3.7 per cent over the year to September 2024.
Private sector wages growth fell from 4.1 per cent to 3½ per cent, which at face value seems a bit more dramatic, but is in truth largely a function of the different timing of last years pay rises between the public and private sectors.
This was the lowest annual figure for private sector wage price growth since 2022.
In real time, wage price pressures between the sectors aren't too dissimilar, and are softening in tandem.
At the state level, the strongest wage price growth over the year was seen in Tasmania (+4 per cent), galloping Queensland (+3.9 per cent), and New South Wales (+3.6 per cent).
The weakest growth was seen in indebted Victoria (+3.2 per cent) and the Northern Territory (+3 per cent).
In other news, Jobs & Skills Australia reported job advertisements decreasing modestly by -2.3 per cent (or -5,300 advertisements) in October, to a still solid 226,500.
Source: Aus Gov
The wrap
Overall, the wage price figures were a pretty soft set of numbers, which missed expectations.
About ¼ of the contribution to increased wages this time around related to healthcare, social assistance, and NDIS roles, with the sector continuing to expand rapidly.
CBA predicts that with most workers saving their tax cuts to build up their buffers, policy interest rates will be on the way down from February, but at the same time recent market moves have seen government bond yields move higher in response to international developments.
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