I’d better say this before I am arrested in two days.
The CBA Labour and Wage Report (is that a religious text I can quote from?) is a terrific leading indicator for wage growth.
- For the quarter and the year ending in December, wages increased by 0.8% and 3.1%, respectively.
- December saw the addition of about 23,000 positions, indicating that hiring was still occurring, albeit more slowly.
- The labor market is generally seen as tight, and the unemployment rate is still 4.3%.
Wage growth is sliding inexorably to a two-handle as mass immigration has its way.
The jobs market is still too weak to prevent mass immigration from lifting unemployment as well.
The breakeven jobs rate is 25-30k with mass immigration at current levels.
Even so, with weak productivity, this level of wage growth should be easily absorbed within the 2-3% RBA band.
Rather, the RBA faces a cost-push inflation problem largely due to energy prices that it cannot affect, which will pass in due course.
Unlike CBA, I do not expect the bank to raise rates in February or throughout 2026.
