Australia wages stuck in the slow lane, but wealth on the rise

[SYDNEY] Australian wage growth stayed stuck in slow gear last quarter, a helpful restraint on inflation but also a halter on household incomes and spending power.

Wages rose 0.6 per cent in the third quarter, data from the Australian Bureau of Statistics showed on Wednesday, matching the gain made in the previous quarter. Annual growth remained at 2.6 per cent, equal to the slowest pace in at least two decades.

With consumer prices up 2.3 per cent in the same period, real wages hardly grew at all over the year to September.

Concerns about family incomes loomed large in the latest survey of consumer sentiment from the Melbourne Institute and Westpac Bank out on Wednesday.

While the overall index of confidence did edge up 1.9 per cent, pessimists outnumbered optimists for the ninth month running in the worse streak since the global financial crisis.

Yet, the subdued pace of wages is also a key reason the Reserve Bank of Australia (RBA) is confident inflation will remain consistent with its target of 2 to 3 per cent, even as a lower currency lifts prices for imports.

With inflation contained, the central bank has been able to keep interest rates at a record low of 2.5 per cent for 14 months now which has helped boost household wealth, both from higher home prices and a pick-up in the share market.

Recent ABS data showed household net worth had climbed to a record A$7.6 trillion (US$6.60 trillion) at the end of June, equal to around A$321,635 for every Australian.

And it looks certain to have grown even further, with home prices rising 1.5 per cent in the three months to September. The total value of Australia's homes was estimated to have grown by almost A$100 billion in the quarter to stand at A$5.3 trillion.

REUTERS