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Wages rise 'won't stop rate cut'
A SLIGHTLY better than expected rise in wages will not stop the Reserve Bank from cutting interest rates by Christmas, economists say. Australian Bureau of Statistics data out today showed total hourly rates of pay, excluding bonuses, rose 1.2 per cent in the June quarter. "There's still no issue on the wages side so it won't prevent the Reserve Bank cutting rates," he said. This was slightly more than market expectations for a 1 per cent increase. On an annual basis, wages have climbed by 4.2 per cent, which was marginally above economists' expectations for a 4.1 per cent increase. The index measures movement in underlying wages by calculating the change in the wage and salary cost of a basket of jobs. Commonwealth Bank senior economist Michael Workman said the Reserve Bank was still on track to cut interest rates, which CBA expects will occur in November, because the labour price index was not signalling wages pressures in the economy. "The wages numbers overall would need to be pushing through to 4.5 per cent (annually) to be an issue." Mr Workman said the labour market was showing signs of softness, with the bigger than expected jump in the labour price index due to higher wages in the mining, engineering, infrastructure and public service sectors. Lower wages in the retail, wholesale and financial services sectors had helped overall labour prices grow at a more moderate pace. "Jobs growth has come down considerably on a monthly basis," he said. Article from: AAP / and news.com.au  |
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Sutherland
Friday, September 19, 2008