The Wage Price Index data last week was one of the most eagerly awaited releases for some time. There was modest good news in the report, with the +0.6% quarterly result the first positive surprise for four years and annual growth now only 2.1%. There were also some encouraging signs within the detail with more than 60% of industries now experiencing wage acceleration compared to just 16% a year ago. But on the disappointing side, wages growth remains weak across industries, sectors and states. In fact, the acceleration in wage growth is currently all in the public sector with private sector wages only showing gradual signs of improvement. The RBA has been hoping for some improvement in wages growth, so this data will continue to gain focus going forward.
There is a diverging view with regard to the upcoming actions by central banks at the moment. The minutes of the February RBA board meeting last week confirmed that there is no pressure to move the official cash rate any time soon. Similarly, the minutes of the latest European Central Bank meeting also showed a very steady monetary policy stance, not ready to reduce its current quantitative easing (bond purchases) let alone raise interest rates. This is in contrast to the US where the Federal Reserve is almost certain to hike US rates again in March and multiple times thereafter.