Wages growth cooled slightly in the March quarter, but not enough to impact any interest rate deliberations by the Reserve Bank of Australia (RBA).
Total hourly rates of pay, excluding bonuses, rose by a seasonally adjusted 0.9 per cent in the March quarter, following a 1.0 rise in the December quarter, the Australian Bureau of Statistics said on Wednesday.
JP Morgan economist Tom Kennedy said wages growth was in a range the RBA would be comfortable with.
“As it stands, the current level of wage growth provides no clear signal that the RBA needs to cut rates again unless a further deterioration in the data provides scope to do so,” he said.
“In annual terms it’s attracting 3.6 per cent, which is probably not high enough yet for the RBA to really worry about wage inflation.
“When combined with the surprise decline in the unemployment rate, it suggests that the labour market (and wages growth) is currently tracking above expectations.”
In April the unemployment rate fell to 4.9 per cent, from 5.2 per cent in March.
CMC chief market strategist Michael McCarthy said the wages data showed could mean that inflation is lower than what the RBA is forecasting.
In the minutes of the RBA’s May 1 meeting the central bank cited lower inflation as a reason to cut the cash rate by 0.5 per cent to 3.75 per cent.
It was the largest interest rate cut since the height of the global financial crisis in February 2009.
“It’s not reflected in this increase in wage costs – this has inflationary implications, as well as speaking to a much better than expected demand situation,” Mr McCarthy said.
