- Wages growth was 0.8% for the quarter, and 4.1% for the past 12 months.
- Revisions to previous quarters' results mean there isn't much to read from this, and it's unlikely to alarm the RBA.
- Changes to wage setting practices from Commonwealth public workers, that sector posted some of the strongest results in 12 years.
- Meanwhile, just 11% of private jobs reported wages growth at all in the June quarter.
The wage price index (WPI) advanced 0.8%, seasonally adjusted, in the second quarter, below market forecasts for a 0.9% rise.
“The June quarter 2024 private sector rise was the lowest rise for a June quarter since 2021 and the equal lowest rise for any quarter since December quarter 2021,” ABS head of prices statistics Michelle Marquardt said.
The annual pay rise rate held steady at 4.1% as Q1 2024 growth was revised up slightly to 0.9% from 0.8%, exceeding the market consensus and RBA’s estimate for the rate to land at 4%.
The June quarter outcome was consistent with the central bank’s assessment that wage growth is past its peak and will gradually moderate to 3.3% by the end of 2026.
At its current rate, salary growth in Australia maintained its lead against the rise in consumer prices, which sits at 3.8% over the same period.
Public sector wages growth accelerates, private sector slows
Driving the increase was the rise in public sector wages, which climbed 0.9%, up from 0.6% in the quarter prior.
According to Ms Marquardt, the newly synchronised timing pattern of Commonwealth public sector agreement increases resulted in the stronger June quarter wage bump in the public sector.
“All Australian Public Service (APS) employees received pay increases effective 14 March 2024. This led to a larger increase in the contribution Commonwealth jobs made to public sector wage growth,” she said.
“Pay rises for these jobs had previously been paid at different times across quarters depending on the timing of individual agency agreements.”
This brought the public sector annual wage growth up to 3.9%, higher than 3.8% in the March quarter and 3.1% recorded at the same time last year.
Jobs in the public sector also posted the highest annual pace of wage growth – health care and social assistance rose by 5%, and education and training up 4.3%.
“These industries are tied to government services and are less responsive to cyclical changes in the economy,” CBA economist Stephen Wu said.
Meanwhile, wages in the private sector grew 0.7%, down from 0.9%, as only 11% of jobs saw a pay rise in the June quarter.
“Q2 is usually a quiet quarter for pay rises but that still puts it on the low side of pre-pandemic patterns,” NAB senior economist Taylor Nugent noted.
“[A] 0.7% private sector outcome annualises to around 3%, but the average pay rise where it occurred was 4.2%.
“We expect that discrepancy to be narrowed by some payback, or an upward revision as seasonal adjustment gets to grips with new seasonal patterns.”
On an annual basis, salaries of Aussies employed in the private sector went up 4.1%, easing from three consecutive quarters of 4.2% lift, but still higher than the 3.9% recorded in the same time a year ago.
Revisions cloud easing in wages growth
Major economists noted how fairly substantial revisions to recent history have made the WPI appear elevated at face value.
As such, Mr Nugent cautioned against overinterpreting the quarterly outcome given consistent revisions recently with pay increases.
There were upward revisions of 0.1 percentage points in Q1 and Q3 2023, as well as in Q1 2024.
This was partly offset by a 0.1 ppt downward revision in Q2 2023, thus resulting in the current annual rate outcome of 4.1%.
Looking ahead, economists said the recent print, while higher than forecasts, should give the RBA added confidence that the pace of wage gains would further moderate.
“While not a net surprise to the RBA’s forecasts, today’s data will help build comfort that the labour market is moving closer to a more balanced setting,” Mr Nugent said.
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