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Australia's Q1 wages growth disappoints, bolsters lower-for-longer rates view
[SYDNEY] Australian wages rose a feeble 0.5 per cent last quarter and private-sector growth stayed near historic lows, a disappointing outcome that risks putting a lid on spending and restraining already tepid inflation.
The local dollar slipped 0.4 per cent to US$0.7447 as the data cemented views that the Reserve Bank of Australia (RBA) will hold rates at a record low 1.50 per cent for a prolonged period as it awaits a revival in consumer prices.
Wednesday's figures from the Australian Bureau of Statistics showed the wage price index rose 0.5 per cent in the three-months ended March, from the previous quarter, lagging expectations for a 0.6 per cent increase.
Growth for the December quarter was also revised lower to show a gain of 0.5 per cent.
Annual wage growth climbed 2.1 per cent, in-line with forecasts, but only just above the all-time trough of 1.9 per cent and barely ahead of consumer price inflation.
Annual wage growth in the private sector stayed stuck at 1.9 per cent with not a single industry paying more than 2.8 per cent. The strongest growth rates were in healthcare and education, with mining wages up just 1.4 per cent - nowhere close to the rate enjoyed during the decade-long mining boom that began early 2000s.
The miserly pace of wage growth is a major reason RBA does not see core inflation reaching the mid-point of its 2 to 3 per cent target band during its forecast period ending mid-2020.
On Tuesday, RBA Deputy Governor Guy Debelle said it may take a lower unemployment rate than currently expected to generate a sustained move higher in wage growth.
The central bank last cut rates to a historical low of 1.5 per cent in August 2016, notching up the longest period without a change in modern history. Financial markets are wagering the steady spell could last well into 2019.