Home Markets RBA’s wages test still far off as 10pc of industries meet it

RBA’s wages test still far off as 10pc of industries meet it

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Davies finds that only one of the 18 different industry sectors (or 6 per cent) currently passes that test. Unsurprisingly, that is professional services. Try hiring a lawyer right now: it is awfully expensive.

Davies gets a similar result if he weights each industry by their share of total employment: just 10 per cent of the labour market is capturing wage growth greater than 3 per cent annually.

 

“More broadly, the story is that there hasn’t been strong wages growth across the bulk of Australian industries since way back in 2012, which is one reason why governor Lowe is so sceptical that total wages growth can accelerate fast enough to rationalise the financial market’s expectations for a series of interest rate hikes next year,” Davies says.

Goldman Sachs notes that in the last 12 months only the construction (2.6 per cent), professional services (3.4 per cent) and hospitality (2.5 per cent) sectors reported annual wages growth above 2.5…

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