Financial News: Australia Wage Growth Weakest In A Year; Consumer

Australia Wage Growth Weakest In A Year; Consumer Sentiment Improves

08/13/2024 - 05:22:00 (RTTNews)

(RTTNews) - Australia's wage growth posted its slowest growth in a year in the June quarter, reflecting the gradual loosening of labor market, official data revealed on Tuesday.

Consumer confidence improved in August as the support from tax cuts and other fiscal measures became more apparent, a private survey showed today.

The wage price index climbed 0.8 percent sequentially, following a 0.9 percent rise in the first quarter, the Australian Bureau of Statistics reported. A similar slower growth was last seen in the second quarter of 2023.

On a yearly basis, wage growth steadied at 4.1 percent.

The public sector contributed about 25 percent of overall wage growth in June quarter. Public sector wages rose at a faster pace of 0.9 percent, while growth in private sector wages eased to 0.7 percent from 0.9 percent.

"The stronger June quarterly rise for the public sector was largely due to the newly synchronised timing pattern of Commonwealth public sector agreement increases," ABS head of prices statistics Michelle Marquardt said.

Capital Economics' economist Abhijit Surya said wage pressures are expected to ease but there are reasons to think that the Reserve Bank won't change course on policy anytime soon.

Earlier, RBA Chief Michele Bullock said that if productivity does not improve, then wage rises of around 3.5 percent might not be enough to keep unit labor costs contained.

The economist said the Board will err on the side of caution and hold off on cutting rates until the second quarter of 2025.

The Westpac-Melbourne Institute Consumer Sentiment Index rose to 85 in August from 82.7 in July.

The improvement centered around family finances, while cost of living and fears of rate hike continued to weigh heavily.

"It seems likely that the Board will hold the cash rate unchanged at its next meeting," Westpac's head of Australian macro-forecasting Matthew Hassan said.

Elsewhere, the NAB business confidence survey showed that the business conditions index improved to +6 in July. On the other hand, the business confidence index dropped to +1 point.

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