Weak wages prevail in limp jobs market

Weak wages prevail in limp jobs market

Weak wages prevail in limp jobs market

The Australian Bureau of Statistics (ABS) said on Wednesday that its wage price index rose just 0.5 per cent in Jan-March, matching forecasts and compared with a similar reading the previous quarter.

Close attention is being paid to wages growth and the job market.

"The fact that wage growth is stuck in the doldrums comes as little surprise given the deterioration in Australia's labour market, with the jobless rate climbing from 5.7 per cent to 5.9 per cent", Mr Kennedy said, in a reference to the rise in the jobless rate over the year to March.

It should be noted though that the fourth quarter of 2016 was the highest employment rate recorded.

Overall, subdued wage growth supports our view that underlying inflation will remain below the 2-3% target for a year or two yet and the squeeze on real wages suggests that the slowdown in consumption growth is just getting going.

Professional, scientific and technical services recorded the lowest quarterly wages growth of 0.2%.

It was the second consecutive month that the index has fallen, taking it further away from the 100 level where the number of pessimists matches optimists. "Full-time employment losses meant that employers effectively downgraded some positions, which was reflected in a 0.3 per cent decline in hours worked", Citi economists said.

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The Bank of England expects inflation to peak at around 2.8% later this year, and gradually return to target afterwards. Following the report, cable reacted to the upside, breaking 1.30 for the first time since September 2016.

Rises through the year in the private sector ranged from 0.6% for mining to 2.4% for healthcare and social assistance. The continuing change towards part-time jobs and underemployment seems to be adding to weak wage outcomes.

This raises questions about the Reserve Bank of Australia's confidence around a gradual rise in inflation year.

In terms of employment there was the largest decrease in the rate over the quarter since 2009.

It sees wages rising gradually in line with an improvement in the jobs market and the end of the drag on growth from a slump in mining investment.

Yet there was scant sign of a pick-up in the latest wages report.

Private sector wages rose by 1.8 per cent from a year earlier, while public-sector wages increased by 2.4 per cent from a year earlier.

"Growth in part-time employment, rather than full-time work, becomes a problem - and indeed undesirable - when there is growth in the number of workers who are not working as much as they would like".

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