Q1 Wage Growth Slumps Below Forecasts

Cornelia Mascio
Mag 16, 2018

Board agreed there was not a "strong case" for a near-term adjustment in monetary policy, Tuesday's six-page minutes showed.

In the United States, Treasuries were little changed to open the week on Monday during a relatively quiet session light on data of great significance with news flow largely limited to FOMC commentary from Cleveland Fed President Mester overnight, reiterating the likelihood of further rate hikes over the medium-term and St. Louis Fed President Bullard warning of possible yield curve inversion in late 2018 or early 2019 if the Fed continues to tighten further.

As seen in the chart below from Callam Pickering, APAC Economist at global jobs site Indeed, while nominal wages did increase, including inflation, real wage growth went backwards during the quarter. However, there is a risk it may take a lower unemployment rate than now expected to generate a sustained move higher, he added.

"How much longer is wages growth going to remain at its current low rates?"

Indeed, the RBA expects the unemployment rate to stay there by year-end.

Meanwhile, the S&P/ASX 200 index traded 0.16 percent lower at 6,112.5 by 03:50 GMT, while at 03:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at 53.56 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend).

"The increase in wages growth and inflation was expected to be gradual however because spare capacity in the economy was expected to be reduced only slowly".

Normally, I wouldn't quibble about decimal points but RBA deputy governor Guy Debelle's recent statement at the CFO Forum held in Sydney yesterday, quipped that "Recent data on wages provides some assurance that wages growth has troughed".

Altre relazioniGrafFiotech

Discuti questo articolo

Segui i nostri GIORNALE