| Consensus | Actual | Previous | |
|---|---|---|---|
| Quarter over Quarter | 0.9% | 0.9% | 1.3% |
| Year over Year | 4.1% | 4.2% | 4.0% |
Highlights
Australia's wage price index rose 0.9 percent on the quarter in the three months to December after advancing 1.3 percent in the three months to September, with year-over-year growth in the index picking up from 4.0 percent to 4.2 percent. Monthly labour market data over that period showed ongoing low unemployment rates and participation rates close to record highs.
Today's data are in line with an assessment made by officials at the Reserve Bank of Australia at their most recent policy meeting earlier in the month that conditions in the labour market remain tight. Officials noted then that wages growth has"remained robust" but judged that conditions in the labour market are likely to ease over 2024 and deliver growth in wages that are consistent with their inflation target. This forecast, however, is based on an assumption that productivity growth increases to around its long-run average, an assumption that officials acknowledged represents a"material risk".
Today's data are in line with an assessment made by officials at the Reserve Bank of Australia at their most recent policy meeting earlier in the month that conditions in the labour market remain tight. Officials noted then that wages growth has"remained robust" but judged that conditions in the labour market are likely to ease over 2024 and deliver growth in wages that are consistent with their inflation target. This forecast, however, is based on an assumption that productivity growth increases to around its long-run average, an assumption that officials acknowledged represents a"material risk".
Market Consensus Before Announcement
Wage growth in the fourth quarter is expected to rise 0.9 percent on the quarter and 4.1 percent on the year. These would compare with third-quarter rates of 1.3 and 4.0 percent.
Definition
A measure of the price employers pay for labour due to market factors, specifically wages and salaries. Wages and salaries reflect payments in cash or kind that are made at regular intervals and include: piecework payments; enhanced or special allowances for working overtime or unsocial hours; regular supplementary allowances ; payments for employees away from work for short periods but not including absences for sickness or injury; and bonus and incentive payments.
Description
The wage price index is an easy way to evaluate wage trends and the risk of wage inflation. Officials at the Reserve Bank of Australia closely monitor wage inflation to assess the outlook for consumer prices and broader inflationary pressures. Wage pressures tend to strengthen when economic activity is booming and the demand for labor is rising rapidly. During economic downturns, wage pressures tend to be subdued because labor demand is down. By tracking labor costs, investors can gain a sense the outlook for inflation and monetary policy, with interest rates more likely to rise when wage inflation is high.
