By Stella Qiu
SYDNEY (Reuters) -Australian wages rose at a steady pace in the third quarter with the public sector driving the gains, a solid result that, along with a string of upbeat data, reinforced the case for steady interest rates.
Figures from the Australian Bureau of Statistics showed its wage price index rose 0.8% in the third quarter, same as the previous quarter and in line with forecasts.
Annual pay growth held at 3.4%, driven by a pickup in public wage growth to 3.8%, the highest since the second quarter last year. Growth in the private sector, on the other hand, slowed to 3.2%, the lowest in over three years.
“State government pay rises contributed 82% of public sector wage growth this quarter,” said Michelle Marquardt, head of prices statistics at the bureau.
On a quarterly and annual basis, public sector wages grew at a faster pace than the private sector for the third consecutive quarter.
The Reserve Bank of Australia has cut interest rates three times this year but a surprisingly high third-quarter inflation report dashed hopes for more policy easing. Recent data from surging consumer confidence to a jump in home loans suggested financial conditions might not be that restrictive.
Wage growth has been well-behaved, allaying concerns of a damaging wage-price spiral, but the RBA noted some price indices – such as growth in average earnings and unit labour costs – are signalling higher inflation.
The labour market remained tight, with employment surging back in October and the jobless rate falling back to 4.3% from 4.5%. The RBA expects it to hold steady near 4.4% for the foreseeable future.
With inflation not projected to fall back to the 2-3% target band until mid-2026, markets are pricing in just a 50% probability that the RBA can deliver one last cut in May next year.
(Reporting by Stella Qiu; Editing by Himani Sarkar and Sonali Paul)
Comments