Wages growth on the up but still below inflation
Today’s ABS payroll and jobs data is challenging to interpret given the Easter holiday period and occurrence of public holidays.
Headline numbers suggest that over the month to 16 April payroll jobs were down by 0.8 percent, but, over the year ended 16 April, payroll jobs were up 2.0 percent.
Given this fall in jobs, total wages paid also correspondingly fell over the month by 2.5 percent, although again the total wage bill was up 7.4 percent over the past 12 months.
Deconstructing the wage bill – under the assumption that hours worked per job remained unchanged, the figures suggest that wages growth per job has accelerated since the end of 2021; this is consistent with RBA observations.
Annual wages growth per job at the aggregate level appears to now be just above 6 percent when the equivalent figure in mid-November 2021 was just above 4 percent. This in turn corresponded to just below 4 percent based on annual growth of original average weekly total earnings and 2.3 percent as measured by the Wages Price Index (WPI).
The two standout industries, which recorded the greatest wage growth per job were Accommodation and Food Services (potentially related to higher pay rates to attract staff back to the sector most negatively impacted by COVID lockdowns and overtime payments related to staff shortages), and Mining (potentially reflecting greater demand for workers to support strong customer demand)
Based on today’s data, it would seem the WPI next week is likely to show annual wages growth close to 3 percent – a notable step up from recent results but still off the pace with regard to inflation, meaning real wage erosion is still happening.