Wage growth in Australia is expected to have climbed to decade-highs last quarter but, while the headline number might unnerve investors, one-off factors should limit the repercussions for inflation and interest rates.
The median forecast in a Reuters poll of 26 economists was that the wage price index (WPI) rose 1.3 percent in the first quarter, the biggest gain since the series began in 1997.
The annual pace of growth was seen rising to 4.4 percent, from 4.0 percent in the fourth quarter of 2006, dangerously close to the 4.5 percent pace that analysts consider an emerging threat to inflation. The WPI is due out on May 16 and full forecasts can be found on.
That would come hot on the heels of data this week showing a huge 49,600 jobs were created in April, driving the unemployment rate to a 32-year trough of 4.4 percent. However, divining the true strength of wages will be complicated by a change to the timing of a national minimum wage award last year. This had the effect of dampening reported wages growth in the fourth quarter and is likely to have boosted it in the first quarter.
Hogan estimated the change would add around 0.25 of a percentage point to the WPI. Assuming underlying WPI growth was around 1 to 1.1 percent a quarter, then the first quarter outcome could be as high as 1.4 percent.