Australia: Wage growth shows underutilisation in the labour market – ANZ

The wage price index (WPI) released by Australian authorities overnight has not changed the chronic weakness in the labour force, analysts at ANZ Research inform. AUD/USD is being exchanged at 0.6695.

Key quotes

“The wage price index (WPI) rose by 0.5%q/q for the third consecutive quarter in Q4 2019, keeping annual growth at 2.2%.”

“The persistent feebleness in wage growth reflects higher labour market underutilisation during the year and is consistent with the enterprise bargaining agreement data,which show that the average annual wage increase for all current agreements is now at a record low of 2.6%.” 

“The RBA expects wage growth to remain around 2.2-2.3% y/y until at least mid-2022, given that the unemployment rate is not expected to fall below the estimated NAIRU of 4.5% during that period.”