Is it time to get ready for even weaker non-tradables inflation and even lower interest rates? It could be.
The ABS Wage Price Index for Q1 2016 recorded wages growing by just +0.4 per cent in the first quarter, and by +2.1 per cent over the year.
Private sector wages growth has slowed to a crawl at just +1.9 per cent, while wage price growth in the public sector was +2.5 per cent
State versus state
Since 1997, the strongest wage price growth has been experienced in Western Australia, and the weakest in Tasmania.
As for the states and territories that are driving soft wages growth lately?
Not to put too fine a point on it, it’s all of them.
Mining and construction wages growth has softened considerably, although real estate agents were the worst faring industry group year-on-year.
Meanwhile the ongoing rotation in employment from higher paying mining sector into other industries could potentially result in even weaker price pressures than implied by the headline result.
Recall from my recent post here that non-tradables inflation – which is often taken to be a reasonable proxy for domestic price pressures – fell to its lowest annual reading since some seventeen years ago in June 1999.
Overall a soft headline result, though not entirely unexpected, it was forecast accurately by Westpac, AMP Capital joined other forecasters in predicting two further interest rate cuts to a cash rate of 1.25 per cent.
Subscribe & don’t miss a single episode of Michael Yardney’s podcast
Hear Michael & a select panel of guest experts discuss property investment, success & money related topics. Subscribe now, whether you're on an Apple or Android handset.
Need help listening to Michael Yardney’s podcast from your phone or tablet?
We have created easy to follow instructions for you whether you're on iPhone / iPad or an Android device.
Prefer to subscribe via email?
Join Michael Yardney's inner circle of daily subscribers and get into the head of Australia's best property investment advisor and a wide team of leading property researchers and commentators.