The latest data from the Australian Bureau of Statistics reveals that wages in Australia grew by less than expected in the second quarter. The wage price index rose by 0.8% from the first quarter and 3.6% annually. These outcomes support the Reserve Bank of Australia's decision to pause interest-rate increases, as it indicates a positive trend towards reaching the inflation target of 2% to 3%. Economists had anticipated a higher growth rate of 1.0% on quarter and 3.8% annually.
Inflation has also shown signs of cooling in the second quarter, which has allowed the RBA to keep interest rates on hold. This suggests that the pressure on household budgets is easing, providing some relief for Australian consumers. However, there is a potential for an increase in wages in the third quarter, especially due to a rise in the minimum wage and pay hikes in sectors like aged care.
Although fewer jobs experienced wage increases this quarter compared to a year ago, the average wage increases were higher. The share of jobs with wage hikes above 3.0% is at its highest level since 2012.
The RBA has recently published the minutes of its August 1 policy meeting, stating that future interest-rate increases may be necessary depending on the flow of data from the job market, inflation, and the global economy.
Private-sector wages grew by 0.8% over the quarter, while annual growth remained at 3.8%, consistent with the first-quarter results. Public-sector wages rose by 0.7% in the second quarter, with an annual growth rate of 3.1%, the highest since early 2013.
Overall, the latest wages data suggests a cautious yet optimistic outlook for Australia's economy, with potential for further improvement in the coming quarters.