Australia Wages Growth Remains Weak

Australian wages growth remained at record low levels in the first quarter of the year, adding to concerns around high levels of underemployment in the economy, and helping to support forecasts that inflation will rise only gradually in coming years.

Wages rose a seasonally adjusted 0.5% in the first quarter from the final three month of 2016, and rose by 1.9% from a year earlier, the Australian Bureau of Statistics said Wednesday.

Economists had expected wages growth of 0.5% over the quarter, according to a survey by The Wall Street Journal.

In the private sector, wages rose by 0.5% in the first quarter and rose by 1.8% from a year earlier. Public-sector wages increased by 0.6% in the quarter and by 2.4% from a year earlier.

Close attention is being paid to wages growth and the job market. The Reserve Bank of Australia has expressed some puzzlement over the lack of wage pressures across the economy.

In its budget earlier this month the government forecast a strong rebound in wages growth over coming years, something many economists said looked overambitious.

Interest rates are set to remain at record lows while uncertainty exists around the strength of the job market, and downside risks to wages growth persist.

Unemployment has risen a little this year, hitting 5.9% in March. An update for April is due Thursday, with economists expecting no improvement in the jobless rate, and just 5,000 more jobs created over the month.

On Tuesday, the RBA said it is watching trends in the overheated housing market and the soft job market to guide policy decisions into the future.

The RBA appears boxed in by soaring house prices and record household debt on one side, and an unemployment rate that has nudged higher so far in 2017.

-Write to James Glynn at

(END) Dow Jones Newswires

May 16, 2017 21:48 ET (01:48 GMT)