Australia Macro Updates

The One Stop Portal for Australia Macroeconomic Data. Simplified and Summarized!

We simplify and summarize key data so that you don’t have to spend hours reading confusing and long media releases. Read key economic releases and major events here in under 2 minutes. And we will explain the key takeaway for you. Stay informed and form a robust view on macroeconomic matters to aid your successful investment decisions

15th May 2024

Australia Wage Price Index

Key takeaway: The quarterly released wage price index is one of the most important macro economic data points for Australia. Similar to most other developed economies, Australia had seen a spurt in wages post pandemic as the economy re-opened rapidly and acute shortages in labour supply persisted for longer than expected. This had resulted in a period of continual annual wage gains (as reflected by the Wage Price Index) from December 2020 till December 2023. Q1 2024 was the first quarter since the 2020 pandemic that the increase in the Wage Price Index actually declined on a year on year basis. The seasonally adjusted WPI rose 4.1% y-o-y compared to 4.2% seen in the 4th quarter of 2023. This reduction was perceived positively by the market with money markets increasing the probability of RBA easing this year or at the minimum, ruling out any further rate hikes. The 4.1% number was lower than consensus expectations of 4.2%. Similarly, at 0.8% the q-o-q wage price index growth also came in lower than consensus expectations of 1.0%. It is key to note though that a 4.0% annual wage increase level remains far above the 2-3% level seen in the years before the pandemic. However, the RBA has stated that they would be comfortable with a 4% annual wage growth number so long as productivity remains on an improving trend. The last point to note is that at roughly 4% nominal wage growth, real wage growth remains positive at the current level of inflation. That can also continue to keep the economy hot and pressure price increases. 

21st Feb 2024

Key takeaway: Similar to most economies in the developed world, Australia has seen inflation come down from its peak in 2022. Wage growth has remained robust as well. The latest data point from the Australian Bureau of Statistics on wages shows the Index increased 0.9% on a q-o-q basis and 4.2% on an annual basis. The numbers were mostly in line with expectations. However, the key point to note is that wage gains still continue to be far higher than historical averages and that keeps pressure on the look out for a wage price spiral scenario. It was also key to note that with inflation having come down substantially, an annual 4% plus wage growth number results in real wage increases for the average worker. The labour market in Australia still remains tight and the general expectation is for wage gains to continue at a robust pace. It is also one of the reasons why the market does not expect as many rate cuts in Australia compared to the US for instance. Lastly, the latest data showed wage gains increases were higher in the public sector compared to the private sector.  

The Employment Cost Index measures the change in the hourly labor cost to employers over time. The ECI used a fixed “basket” of labor to produce a pure cost change, free from the effects of workers moving between occupations and industries and includes both the cost of wages and salaries and the cost of benefits. It is usually considered the gold standard for understanding the underlying wage growth trends in the economy. The ECI is a quarterly number and is released at the end of about one month from the end of the quarter.

Employment Cost Index – BLS