SYDNEY (Reuters) — Australian wage growth stayed stuck at the slowest pace in at least 16 years last quarter, a mixed blessing that has eaten into household incomes but also fed surprisingly strong demand for labour.
Wednesday's data showed hourly rates of pay excluding bonuses edged up 0.6 per cent in the third quarter, from the previous quarter when they rose by the same amount.
Annual growth held at a Scrooge-like 2.3 per cent, matching the lowest reading since the Australian Bureau of Statistics started compiling the data in 1998.
Wage gains have been slowing since 2008 when they peaked atop four per cent and not a single industry surveyed posted annual growth over three per cent.
The glory days of mining were truly over as wages there rose just 2.1 per cent for the year, while the education sector enjoyed the best outcome at three per cent.
This long moderation in wages has restrained domestically generated inflation, with consumer prices up a tame 1.5 per cent in the year to September.
That in turn led the Reserve Bank of Australia (RBA) to say there was still room for a further cut in the two per cent cash rate, though it sounded upbeat enough on the economy to suggest an actual move was unlikely in the near future.
Much of that optimism is due to the surprising strength of employment — itself a function of the subdued wages story.
Real unit labour costs have hardly risen over the past six years, making workers relatively more competitive compared with capital and encouraging employers to hire more.
Figures out last week showed a hefty 315,000 net new jobs were created in the year to October. Annual jobs growth of 2.7 per cent even beat the two per cent boasted by the United States.
That means more people earning a living and able to spend.
The jobless rate also dipped unexpectedly to 5.9 per cent, the lowest in six months, when the RBA had thought it would stay at six per cent or higher for a whole year before declining.
"The figures already suggest that the RBA's unemployment forecast may be turning out to be too conservative," said Ivan Colhoun, chief markets economist at NAB.
"This (jobless decline) appears to be occurring much earlier than anticipated."