ABS reveals a stagnant 0.5% growth in quarterly wages in Australia

The Australian Bureau of Statistics (ABS) revealed the quarterly wage price index last week on Wednesday. The data suggested that wages in Australia grew at a stagnant 0.5% in the recent quarter while the gain on a year over year basis was recorded at only 2.2%. According to experts, much of the pressure on the index was derived from Australia’s bushfire crisis and the recent outbreak of Coronavirus in China that is weighing on consumer spending and hurting tourism.

Accommodation And Food Services Sector Recorded The Weakest Gain In Quarterly Wages

The weakest growth in quarterly wages was seen in food and accommodation sectors that recorded a 0.2% increase as compared to the previous quarter. While analysts predict that it’ll take a few months before a broad view of how the aforementioned events are going to impact the Australian economy and to what extent is available, employment figures and growth in wages, they remarked, are likely to remain under pressure in the meantime.

Wednesday’s data also highlighted healthcare as the only sector in Australia that is currently suggesting better growth than the decade average at 3.1% (annually). In terms of regions, Victoria took the lead in stirring optimism with a 2.7% increase in wages in the past 12 months. Despite a stable economy and low unemployment, however, New South Wales reported a massive 2.1% decline in the rate of wage growth.

Economist Callam Pickering’s Comments On Australia’s Wages Price Index

Economist Callam Pickering of Indeed commented on Australia’s wage price index and stated:

“We are unlikely to see much improvement in wage growth until the labor market slack declines. At the very least, we need an unemployment rate of 4.5% – currently 5.1% – and an underutilization rate of around 12% – currently 13.5% – to get wage growth back to 3%. Perhaps even lower given how resistant wage gains have been to changes in unemployment. We are years away from achieving those goals. With the reserve Bank anticipating little improvement in wage growth over the next couple of years – and the Reserve Bank has, in recent years, tended to be overly optimistic in terms of growth and economic activity.”

Last week remained heavy for AUD/USD currency in the forex market. Opening at 0.6735 against the greenback on Monday, the Australian dollar continued to fall sharply to a weekly low of 0.6585 on Friday. Later on the last day of the week, however, the pair recovered to 0.6625 fueled by the U.S manufacturing and services sector PMI turning red for USD.