Australian wages growth was better than expected in the second quarter as a result of a strong lift in pay for public servants, although the Reserve Bank of Australia remains likely to lower interest rates again before the year-end.
Wages rose a seasonally adjusted 0.6% compared to the first quarter and rose by 2.3% from a year earlier, the Australian Bureau of Statistics said Wednesday. Drivers included health care and social services.
Private sector wages rose by 0.5% in the quarter, and rose by 2.3% from a year earlier, while public-sector wages rose by 0.8% in the quarter and increased by 2.6% from a year earlier.
Wages growth over the past year was strongest in Victoria state, which logged a 2.9% increase. Western Australia was the outlier with growth of just 1.6%.
Weak wages growth is a major concern for policy makers, with the RBA reducing interest rates in June and July citing a sharp slowdown in consumer demand as the trigger for the cuts.
Economists are betting the RBA will cut further in the months ahead as it attempts to boost GDP growth and mop up spare capacity in the job market.
RBA Governor Philip Lowe has identified weak wages and sagging productivity growth as major challenges for the economy, calling on the governments to lift spending and enact economic reforms.
With the RBA's official cash rate at a record-low 1%, the debate in markets has turned to the possibility that the central bank will soon introduce alternative policy measures to lift the economy.
Source : Bloomberg