Australian wages growth remains at a record low: AMP Capital's Shane Oliver

GUEST OBSERVER

According to the Wage Price Index wages growth was 0.6% quarter on quarter in the September quarter or 2.3% year on year. This was in line with market expectations.

Private wages growth was lower at 0.5% qoq or 2.1% year on year.

Wages growth remains at a record low – at least for the period covered by the Wage Price Index.

Quite clearly the adjustment flowing from the end of the mining boom and associated weak demand  in the economy is continuing to show up in weak wages growth.

This in turn is helping protect employment and partly explains why jobs growth has been able to come in better than expected despite the slow rate of economic growth. So while weak wages growth is a dampener on its own for consumer spending, it’s partly offset by solid jobs growth.

It also means that inflationary pressures coming from the labour market remain weak, reinforcing the RBA’s easing bias which is predicated on the outlook for continuing low or benign inflation.

SHANE OLIVER is head of investment strategy and economics and chief economist at AMP Capital and is responsible for AMP Capital's diversified investment funds.