Labour price easing confirmed

The ABS has today released its quarterly Average Weekly Earnings.

Like the Wage Cost Index yesterday, wages are not accelerating and in fact, in this measure, in the big employment sectors of Retail Trade, Accommodation, Food Services and Admin Services they actually went backwards. Health care which is another big employer was up only 0.5% while mining and associated industries were up just 1%.

Overall it is a picture of decelerating wage gains not accelerating:

Private sector earnings growth is up very marginally but is more that offset by declines in public sector earnings. The history of the trend hints that private sector earnings growth could accelerate from here but it’s very early.

In addition, private wages are well below their decade average:

The RBA has time on its side.

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  1. Outsidetrader

    As I understand it, AWE measures average wages across the economy, and the WPI measures the changes in wage costs of a hypothetical basket of jobs (to try to filter out wage changes due to changes in the composition of employment.

    With WPI now higher than AWE, does this imply that the economy is currently going though a restructure whereby the composition of employment is shifting from higher paying professions toward lower paying professions, or does it mean that most of the growth in the economy is occuring in lower paid sectors? Neither of these explanations sounds plausible given the two-speed nature of the economy at the moment.