Highest quarterly wage growth on record

US data spurs hopes for inflation battle

Hotel and hospitality workers have led the way as wages enjoyed the strongest quarter of growth in the 26-year history of the official price index, lifting 1.3 per cent in the three months to September.

The result compares to a jump of 0.9 per cent in the previous three months.

Wages, as measured by the Australian Bureau of Statistics, lifted 4 per cent on an annual basis – the highest annual growth since March quarter of 2009 – up from 3.6 per cent through to June.

The 1.3 per cent quarterly lift was anticipated by forecasters, with the workplace umpire’s minimum and award wage kicking in at the start of the quarter.

wages growth

ABS head of prices statistics Michelle Marquardt said a combination of factors led to widespread increases in average hourly wages this quarter.

“In the private sector, higher growth was mainly driven by the Fair Work Commission’s annual wage review decision, the application of the Aged Care Work Value case, labour market pressure, and CPI rises being factored into wage and salary review decisions,” she said.

“The public sector was affected by the removal of state wage caps and new enterprise agreements coming into effect following the finalisation of various bargaining rounds.”

EY chief economist Cherelle Murphy said the results weren’t out of line with Reserve Bank expectations that the index would reach 4 per cent by the end of this year.

“But the real test will come next quarter and in 2024,” she said.

“The Reserve Bank expects wages growth will slow in line with the slight easing of labour demand indicators as productivity growth recovers. The bank’s business liaison program has also reported a larger share of
firms expecting wages growth in a years’ time will be below its current rate.”

Murphy said the result was unlikely to spur another interest rate rise at the RBA’s December meeting. But beyond that was less certain.

“The risks are tilted towards another rate hike in the new year – given the labour market remains tight and medium-term inflation expectations have ticked up a little,” she said.

“The impact on inflation from these risks will be worse if productivity outcomes remain poor.”

The quarterly wage boost outpaced the 1.2 per cent increase in inflation over the September quarter, representing a real wage improvement.

The surging cost of living has been outstripping gains in wages, though salaries are starting to catch up.

Private sector wages grew 4.2 per cent annually over the September quarter, and public sector wages increased 3.5 per cent.

– with AAP

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