By Wayne Cole
SYDNEY, Feb 18 (Reuters) – Australian wages rose at a moderate pace in the fourth quarter with the private sector picking up slightly, data showed on Wednesday, while annual growth tracked sideways as it has done for more than a year.
Figures from the Australian Bureau of Statistics showed its wage price index rose 0.8% in the December quarter, the same as the previous quarter and in line with analyst forecasts.
Annual pay growth ticked up to 3.4%, from a revised 3.3%, and has been in a range of 3.2% to 3.6% for six consecutive quarters now.
Growth in the private sector rose 3.4%, from 3.3%, while public wage growth ran at 4.0%, the highest since the middle of 2024. Government funded pay rises in health and child care was a major driver of wage growth over the year.
By these measures, wages are running slightly slower than consumer price inflation, which stood at 3.8% in December, implying real wages are in decline.
However, the wage price index does not include bonuses, overtime, pay increases from moving jobs and the like, and has tended to understate growth in household incomes.
A much broader measure of compensation of employees included in the national accounts grew at an annual pace of 7.1% in the third quarter of last year, well above inflation.
The gains boosted real incomes and helped fuel a pick up in consumer demand, one reason the Reserve Bank of Australia chose to raise interest rates to 3.85% earlier this month.
The RBA also argues that broader measures of labour costs are running hotter than the wage price index, suggesting the labour market is still a little tight and adding to inflationary pressure at the margin.
The central bank’s emphasis on upside risks to inflation have led markets to price in around a 60% chance of a further hike to 4.10% at its May policy meeting.
(Reporting by Wayne Cole; Editing by Christopher Cushing and Michael Perry)
About the Author
