Australia: Removal of excess slack in the labour market - Westpac

According to Justin Smirk, Research Analyst at Westpac, there has been some removal of excess slack in the labour market, as total hourly wages ex bonuses increased 0.5% in Q1, again slightly more than market and Westpac expectations for 0.6% holding the annual rate flat at 2.1%yr.

Key Quotes

“Private sector wages grew 0.5% holding the annual rate at 1.9%yr. Public sector wages grew 0.5% with the gains coming from education (0.8%) and public administration (0.5%). Public sector wage inflation has eased back to 2.3%yr from 2.4%yr which on par with the 2016 record low of 2.3%yr.”

“Last year there was a clear improvement in labour market conditions as measured by total employment, full-time employment, hours worked, unemployment and even underemployment. In addition recent reports suggest various business surveys that Australian firms are starting to find it hard to recruit labour. And yet, we are still waiting for a meaningful lift in wage inflation. This is despite seeing a larger than usual rise in the minimal wage which was expected to boost wages in late 2017 – we are still waiting.”