Colin Brinsden, AAP Economics Correspondent
(Australian Associated Press)
The strong rise in employment over the past 12 months and a four-year low in the jobless rate have failed to impact significantly on wages.
New figures on Wednesday show wages growth remains only just ahead of inflation, leaving some economists questioning their own expectations for an interest rate rise next year.
The wage price index for the September quarter – the Reserve Bank’s and Treasury’s preferred measure of wages growth – grew 0.5 per cent for an annual rate of two per cent.
It was the highest annual rate for just over a year, ticking up from a record low 1.9 per cent, and compares to the inflation rate at 1.8 per cent.
However, economists had expected a stronger 0.7 per cent rise in the quarter to take into account the result of the Fair Work Commission’s minimum wage award from July 1 – a 3.3 per cent pay rise – its largest since 2010.
“The lack of any apparent impact from the larger-than-usual rise in the minimum wage suggests that underlying wage growth actually slowed in the quarter,” ANZ senior economist Felicity Emmett said.
Little wonder consumer confidence remains fragile, a worry for retailers heading into the Christmas shopping season.
The Westpac-Melbourne Institute monthly consumer sentiment index fell 1.7 per cent in November to again show pessimists outnumbering optimists.
Westpac chief economist Bill Evans said the slight return to optimism in October proved short-lived and was the only month over the last year to show optimists in the ascendency.
“Overall, the consumer mood has been downbeat in 2017, with clear pressures on family finances and an uncertain economic outlook weighing on sentiment,” he said.
“Economic uncertainty again featured in November, likely affected by the citizenship saga impacting federal parliament.”
Thursday’s jobs figures appear set to bring some welcome relief to the Turnbull government faced with the growing citizenship crisis and sagging support in opinion polls.
Economists expect a further 20,000 people were hired in October, marking a 13th consecutive month of employment gains and keeping the jobless rate at 5.5 per cent.
Australian Chamber of Commerce and Industry chief economist Adam Carr is confident wage growth won’t stay low indefinitely.
“Over time, we expect the labour market to tighten and wages to rise,” he told AAP.
“If the global and domestic economies continue to improve, if profit growth can be sustained and jobs growth remains strong, wages will increase.”