Shoppers walk around Pitt Street Mall on June 7, 2022 in Sydney, Australia.
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Australia's second quarter wage growth was the slowest in a year, lower than expected, and the slowdown in private sector growth showed that the labor market is slowing.
Australian Bureau of Statistics data on Tuesday showed the wage price index rose 0.8% in the three months to June, following a 0.9% rise in the first quarter and the lowest level since the June 2023 quarter. was up 0.9%.
Annual salary growth remained at 4.1%, but past growth rates were revised slightly upward, meaning annual growth will slow significantly in the third quarter.
The private sector grew 0.7% in the quarter, the lowest level since the 12th quarter of 2021, as unemployment rate Rising due to high interest rates.
Sean Longkerk, head of macroeconomic forecasts at Oxford Economics in Australia, said: “The Reserve Bank of Australia will breathe a little sigh of relief seeing wage pressures subside.”
“However, without improvement in productivity growth, the current pace of wage growth is still a bit too strong for inflation to return to target quickly.”
The Reserve Bank of Australia has kept policy stable since November, believing that the current cash rate of 4.35% (higher than 0.1% during the epidemic) is sufficient to control inflation within the target range of 2-3% while maintaining employment growth.
However, it judged that the labor market is still a bit hot, which is one reason why underlying inflation of 3.9% last quarter is not expected to return to the target range until the end of 2025.
Some analysts believe rates are not high enough yet, but the RBA's reluctance to raise rates further has some economists seeking a rate cut early next year, lagging other major central banks.
Markets are now betting on policy easing before the end of the year, having only recently hinted at the risk of further rate hikes.
Overall annual wage growth remains slightly above the 3.6% inflation rate, a welcome return to real wage growth after years of negative results.
A major round of tax cuts starting in July will further boost revenue.