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Wednesday, 25 February 2015

Wages rise 2.5 percent

Wages growth remains soft

The ABS released its Wage Price Index for the Q4 2014 quarter today which showed wages rising by 0.6 percent over the quarter to be 2.5 percent higher over the year. 

Wages growth of 2.5 percent is historically low, but well ahead of the rate of inflation which was only 1.7 percent over the past year (or an average of 2.25 percent on the trimmed mean and weighted median readings).

The headlines will likely reflect slowing wages growth, particularly since public sector wages growth at 2.7 percent was stronger than private sector wages growth of 2.5 percent on a seasonally adjusted basis.

Although wages growth has slowed from the heady mining boom years, Australian wages are still rising both in real and nominal terms.

Wages growth has slowed dramatically in Western Australia as the mining construction boom recedes.

This was particularly so for private sector wages growth of just 2 percent which is the slowest growth on record in WA.

Wages growth in the Australian Capital Territory slowed to just 1.7 percent driven by cuts in Canberra while Northern Territory wages growth now appears to have stabilised over the last 6 quarters at a more sedate 2.8 percent per annum.

Generally the trend is towards slower wages growth.

The 1, 5 and 10 year wages growth figures show just how much wages in Western Australia benefited from the mining boom.

The Wrap

Overall a soft set of numbers, but an unsurprising release, the impact of which was outweighed today by a better-than-expected Construction Work Done set of figures, which I'll step through later.

In other news, Domain Group's Dr. Andrew Wilson has constructed a new housing market analysis tool - the "Countdown to Sydney $1,000,000 median house price".

Wilso's tool projects that Sydney's median house price will surpass seven figures in 474 days, 11 hours and 7 Minutes time (approximately).