Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)
Wage growth has slumped to a record due to the impact of the first recession in almost 30 years and the subsequent spike in unemployment.
The September quarter wage price index – a key measure of wages growth used by the Reserve Bank and Treasury – rose just 0.1 per cent.
This dragged the annual rate down to a mere 1.4 per cent, the slowest pace since the Australian Bureau of Statistics began the series in 1998.
It compares with an annual rate of 1.8 per cent as of June.
The bureau’s Andrew Tomadini said the September quarter was usually a quarter for solid wage growth.
“Organisations continued to adjust to the economic uncertainty, recording fewer end of financial year wage reviews and delaying enterprise bargaining agreement increases,” he said.
“This led to a significantly reduced number of jobs recording wage rises when compared to previous September quarters.”
However, there was more positive news on the outlook.
The Westpac-Melbourne Institute leading index, which indicates the likely pace of economic growth three to nine months into the future, saw its strongest rise since the early 1980s.
It also pointed to above-trend economic growth – around 2.75 per cent – for the first time since November 2018.
“Developments in the index are consistent with Westpac’s view that growth in the Australian economy will be significantly above trend in both the September and December quarters,” Westpac chief economist Bill Evans said.
This will follow the steep seven per cent contraction in the June quarter.
The September quarter national accounts are due on December 2.
Reserve Bank governor Philip Lowe agreed that the economy is in recovery.
“We had a huge drop in output, we are on the road back,” he told The Australian’s Strategic Forum 2020 during a panel discussion on Wednesday
He said there was a lot of stimulus in the system and confidence was increasing, but a full recovery would take time.
“It is very uneven. I think it is going to be uneven for quite a while until we find a new equilibrium in the post-COVID world,” he said.
Mr Evans expects momentum will slow in 2021 when support measures like JobKeeper are removed.
There was also positive news on the hiring front, with job advertisements posted on the internet rising by a further 6.2 per cent in October and are almost back to where they were a year ago.
Job ads increased across all eight occupational groups monitored by the Department of Education, Skills and Employment.
Among the states, Victoria led the way with a 10.2 per cent increase in ads during the month as it emerged from lockdown, but they still remained 23.3 per cent down on the year.