Data released by the Australian Bureau of Statistics (ABS) showed that wage growth slowed in the first quarter after reaching a 15-year high in the fourth quarter of 2023. Overall, the data reinforced expectations that wage demand is peaking, supporting a gradual moderation of inflation pressures over the coming year. The slowdown in wage growth should also ease pressure for a further rate rise from the Reserve Bank of Australia (RBA). Markets imply little chance of a rate cut until April 2025, with around an 8% risk of one more hike later this year.
According to the report, the wage price index rose by 0.8% after an increase of 1.0% in the 4th quarter (revised from +0.9%). This was the weakest growth since the end of 2022. Economists had expected an increase of 0.9%. In annual terms, wage growth slowed to 4.1% from 4.2%, while economists expected the figure to remain unchanged. Growth in the private sector also dipped to 4.1%, its first fall since the third quarter of 2020. Wages in the public sector increased by 0.5% QoQ and by 3.8% per annum (compared with +4.3% per annum in the 4th quarter). Experts said that despite the slowdown, wage growth rates still exceed the inflation rate (3.6%), a welcome return to real pay growth after years of negative outcomes.