Wages grew by 3.4 per cent in the year to June, and above expectations, providing a boost to workers’ real incomes.
The annual figure was steady from the first quarter, but because inflation fell to 2.1 per cent in that March quarter, real wages growth is now up by 1.3 per cent.
With the wage price index rising at 0.8 per cent over the three months to June, the Australian Bureau of Statistics reported on Wednesday, wages are stabilising after peaking at 4.2 per cent at the end of 2023.
A smaller proportion of jobs were getting large wage increases than a year ago, contributing to lower overall wage growth, said ABS head of prices statistics Michelle Marquardt.
Public sector wages rose one per cent over the quarter, outpacing those in the private sector, who saw an average increase of 0.8 per cent.
“This quarter’s lift in the public sector reflected backdated pay rises from recently approved state-based enterprise agreements coming into effect, coupled with regular scheduled pay increases,” Ms Marquardt said.
Following the Reserve Bank’s widely expected cash rate cut on Tuesday, labour market figures would be key to the central bank’s next rates decision in September, said CBA senior economist Belinda Allen.
Central bank governor Michele Bullock said the board would take things “meeting-by-meeting”, keeping a close eye on upcoming data releases to ensure the economy continues to progress in line with its goals.
Ms Allen expects the RBA to wait until November before cutting again, but that could shift depending on how the data unfolds.
“The governor did not rule out back‑to‑back cuts. Inflation appears under control, so any acceleration of the cutting cycle we expect would have to be driven by a deterioration in the labour market,” she said.
The most important data readings before the next meeting would be labour force surveys released on Thursday and in September, as well as economic growth figures for the June quarter to be released on September 3, Ms Allen said.
RBA staff lowered their GDP growth forecasts as they pared back their expectations for trend productivity growth from one per cent to 0.7 per cent per year.
Australia’s economy is now expected to expand by 1.7 per cent – down from 2.1 per cent – in 2025.
Traders are pricing in about a one-third chance for a September cut.
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