The Reserve Bank of Australia (RBA) has to be the worst forecaster of wages and incomes in Australia.
After being far too bullish on wages over the past decade:
RBA always too bullish on Aussie wages.
It got egg on its face yet again when yesterday’s wage price index for the June quarter came in soft.
The RBA’s August Statement of Monetary Policy (SoMP) also noted that “broader measures of labour income growth are expected to increase at a faster rate than the WPI over the forecast period… as more hours are worked at overtime rates and as workers move jobs for higher pay”. It then produced the next chart showing strong growth in average earnings per hour:
RBA forecast strong growth in average earnings.
Today’s biannual Average Weekly Earnings survey from the ABS has once again demolished the RBA’s forecast, reporting a soft 3.0% annual increase in average weekly total earnings:
Average weekly total earnings remain soft.
Yet again, the RBA’s bullish wage growth forecasts have been shattered, proving that Australia is not experiencing any wage-price spiral.
In turn, the case for the RBA to continue hiking rates aggressively has been extinguished.
This is especially the case given the Albanese Government is about to ramp immigration to its highest ever level, which will flood the labour market with workers and kill wage growth.
