Excuse me while I sadly cross off another three months on my \u201cwaiting for a wages breakout\u201d calendar.<\/p>\n
Before I get to the wages figures, may I pause to note that this month NAB reported<\/a> a 5% increase in its profits compared with last year, CBA reported<\/a> a 7% increase in its cash profit, BHP reported<\/a> annual profit growth of 9% and Rio Tinto recorded<\/a> a 47% profit increase in the first half of this year.<\/p>\n Let\u2019s just leave those figures there. Maybe think on them as we go on.<\/p>\n Yesterday, the June quarter wage price index figures were released showing that in April, May and June the average growth of wages in the private sector was just 0.7% \u2013 the lowest since December 2021. If that pace continued it would equate to an annual growth of just 2.8%:<\/p>\n If the graph does not display click here<\/a><\/p>\n I don\u2019t want anyone to get too worried, but that level of wage growth is truly pathetic.<\/p>\n You know what also happened in the June quarter? Yes, the RBA raised interest rates.<\/p>\n One of the reasons the RBA decided to raise interest rates<\/a> was the \u201crisk\u201d of wages going up \u2013 even though at the time private-sector wages were growing the slowest they had for nearly six years.<\/p>\n The annual growth in the year to June saw private-sector wages slow from 3.2% in March to 3.1% \u2013 the slowest since June 2022:<\/p>\n If the graph does not display click here<\/a><\/p>\n The only thing that kept the overall wage growth steady at 3.2% was the solid growth in public-sector wages.<\/p>\n The ABS has helpfully provided some new data on what industries contributed the most to overall inflation, and the public-sector driven industries of public administration and healthcare were the two biggest, followed by construction:<\/p>\n If the graph does not display click here<\/a><\/p>\n Over the past year, inflation rose faster than the wage growth in every single industry, and even the construction industry \u2013 which should notionally be seeing wages taking off due to the increase in datacentre construction and also the nationwide shortage of workers \u2013 has had wages grow slower than inflation:<\/p>\n If the graph does not display click here<\/a><\/p>\n If we can\u2019t even get a wage breakout in the industry where there is apparently so much work due to the AI datacentre boom that it was a reason the RBA gave for increasing rates, then I don\u2019t know what more evidence we need that wages are not growing out of control and that the labour market is not \u201ctight\u201d.<\/p>\n The ABS also found that in the June quarter 79% of jobs that got a change in wages had an annual wage growth of less than 4%. That is the most since 2022, and is a sign that the majority of wage growth agreements are at level more than consistent with inflation of less than 3%.<\/p>\n If the graph does not display click here<\/a><\/p>\n Of course, the big problem with all these numbers is that they are currently less than inflation, and the bigger problem is they are much less than the recent increase in cost of living (which includes mortgage repayments):<\/p>\n