Wage growth held steady in the March quarter, which is about the best the RBA could have hoped for given everything else going on.
🧑🏻💼 WPI rose 0.8% QoQ
🧑🏻💼 Annual wage growth was 3.3% YoY (down from 3.4%)
🧑🏻💼 Private sector wages rose 0.8% QoQ and 3.2% YoY (down from 3.4%)
🧑🏻💼 Public sector wages rose 0.5% QoQ and 3.3% YoY (down from 4.0%)
🧑🏻💼 Healthcare and social assistance was the largest industry contributor (+0.7%)
🧑🏻💼 The public-private wage growth gap has narrowed substantially after five consecutive quarters of faster public sector growth
Wage growth staying in line is a small bright spot among a sea of concerns for the RBA. While this print is backward looking and doesn’t factor in the recent surge in inflation. The prints later in the year will be the telling ones, especially the September quarter when the impact of June pay increase will flow through. I expect we will see fuel prices rebound higher before then (even if the war ends), which means there’s going to be substantial pressure on households which will flow through toe wage negotiations.
The other important thing to keep in mind is that the WPI measures price changes for the same job over time. It deliberately strips out compositional changes like people switching to higher paying roles, picking up extra hours, or moving from part-time to full-time work. That means it understates what is actually happening to household incomes. The national accounts measure compensation of employees, which captures all of those effects, and has been growing significantly faster than the WPI.