Australia’s wage growth remained elevated in the second quarter, reflecting persistent inflation pressures in the economy and supporting the Reserve Bank’s view that interest-rate cuts remain some way off.
The Wage Price Index advanced an annual 4.1% in the three months through June, matching the first quarter while exceeding economists’ estimate of 4%, Australian Bureau of Statistics data showed Tuesday. On a quarterly basis, wages grew 0.8%, slightly lower than the prior period and forecasts.
The report validates Governor Michele Bullock’s comments that rate cuts are unlikely this year after the RBA last week held its benchmark at a 12-year high of 4.35%. Still, money markets are wagering a 50-50 chance of an easing in November and fully pricing one in December.
The RBA’s board is closely watching inflation and the labor market, with employment data due on Thursday and economists anticipating the jobless rate held steady at 4.1% in July.
RBA officials have previously said wage growth of around 4% is consistent with the central bank’s 2-3% inflation target provided the economy’s productivity performance improves. Yet they’ve been sounding more concerned on that recently as there has been little sign of a return to solid productivity gains.
Public sector wages grew 0.9%, outpacing those in the private sector on a quarterly basis, the ABS said.
