ID :
183148
Thu, 05/19/2011 - 13:56
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Shortlink :
http://m.oananews.org//node/183148
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Average wage growth outpacing CPI
(AAP) - The average annual wage is still growing faster than inflation, even after the consumer price index (CPI) ballooned beyond the Reserve Bank's comfort zone in its most recent reading.
New data released on Thursday showed the average wage now stands at $67,018, after growing 3.8 per cent in the year to February.
This compared with an annual CPI of 3.3 per cent in the March quarter, above the central bank's 2-3 per cent target band.
Commonwealth Bank economist James McIntyre said the wages outcome remained consistent "with a continuation of the strong household income growth theme that had been playing out for some time".
Still, this was the slowest pace of wage growth in four years and suggests that the Reserve Bank won't be lifting interest rates just yet to curtail a potential wages break-out due to a tight labour market.
Economists have been keeping a close watch on this week's wages data as it has been highlighted by the central bank as one potential risk to the economy that would require a rise in interest rates.
The Reserve Bank's latest board minutes released on Tuesday expressed concern that "a pick-up in wages in the resources sector would spill over into significant pressure on wages elsewhere in the economy".
But the Australian Bureau of Statistics report on average weekly earnings highlighted the so-called "patchwork" nature of the economy that the federal government frequently refers to.
Wages in the mining sector are now more than double the earnings in food sectors, like cafes and restaurants, as well as the retail sector.
The average annual mining wage stood at $109,143 after growing 5.9 per cent in the year, followed by finance and insurance services at $80,558, up 5.3 per cent.
At the other end of the scale, workers in the accommodation and food services sector earned $47,934, up 3.5 per cent, and retail staff $49,036, rising just 0.7 per cent.
The annual seasonally adjusted rise in average weekly ordinary time earnings (AWOTE) to 3.8 per cent came after wages grew by 1.0 per cent in the three months to February.
Still, the composition of the AWOTE series tends to make it volatile, which is why the Reserve Bank prefers to use the wage price index - released on Wednesday - as one of its main guides to wages growth.
Even so, that index rose by a slower than expected 0.8 per cent in the March quarter, to be also 3.8 per cent higher in the year, rather than accelerating above 4.0 per cent as economists had expected.
The Reserve Bank may also take some comfort from signs that consumer inflation expectations are subsiding, albeit still at levels.
The Melbourne Institute's consumer inflationary expectations survey released on Thursday showed the median expectation for inflation had eased to 3.3 per cent in May from 3.5 per cent in April, and as high as 4.6 per cent in January.
Rising inflation expectations can themselves lead to price pressures as people chase higher wages as compensation.
New data released on Thursday showed the average wage now stands at $67,018, after growing 3.8 per cent in the year to February.
This compared with an annual CPI of 3.3 per cent in the March quarter, above the central bank's 2-3 per cent target band.
Commonwealth Bank economist James McIntyre said the wages outcome remained consistent "with a continuation of the strong household income growth theme that had been playing out for some time".
Still, this was the slowest pace of wage growth in four years and suggests that the Reserve Bank won't be lifting interest rates just yet to curtail a potential wages break-out due to a tight labour market.
Economists have been keeping a close watch on this week's wages data as it has been highlighted by the central bank as one potential risk to the economy that would require a rise in interest rates.
The Reserve Bank's latest board minutes released on Tuesday expressed concern that "a pick-up in wages in the resources sector would spill over into significant pressure on wages elsewhere in the economy".
But the Australian Bureau of Statistics report on average weekly earnings highlighted the so-called "patchwork" nature of the economy that the federal government frequently refers to.
Wages in the mining sector are now more than double the earnings in food sectors, like cafes and restaurants, as well as the retail sector.
The average annual mining wage stood at $109,143 after growing 5.9 per cent in the year, followed by finance and insurance services at $80,558, up 5.3 per cent.
At the other end of the scale, workers in the accommodation and food services sector earned $47,934, up 3.5 per cent, and retail staff $49,036, rising just 0.7 per cent.
The annual seasonally adjusted rise in average weekly ordinary time earnings (AWOTE) to 3.8 per cent came after wages grew by 1.0 per cent in the three months to February.
Still, the composition of the AWOTE series tends to make it volatile, which is why the Reserve Bank prefers to use the wage price index - released on Wednesday - as one of its main guides to wages growth.
Even so, that index rose by a slower than expected 0.8 per cent in the March quarter, to be also 3.8 per cent higher in the year, rather than accelerating above 4.0 per cent as economists had expected.
The Reserve Bank may also take some comfort from signs that consumer inflation expectations are subsiding, albeit still at levels.
The Melbourne Institute's consumer inflationary expectations survey released on Thursday showed the median expectation for inflation had eased to 3.3 per cent in May from 3.5 per cent in April, and as high as 4.6 per cent in January.
Rising inflation expectations can themselves lead to price pressures as people chase higher wages as compensation.
