Pay packets in resource rich Western Australia climbed 5.6 per cent over the year, the fastest in the country, while the mining industry was the top sector for annual wage growth.
Pay packets in resource rich Western Australia climbed 5.6 per cent over the year, the fastest in the country, while the mining industry was the top sector for annual wage growth.
Latest data from the Australian Bureau of Statistics showed the wage price index across Australia grew by 1.2 per cent in the June quarter, seasonally adjusted.
This was slightly more than market expectations for a one per cent increase.
On an annual basis, wages in Australia grew by 4.2 per cent, which was marginally above economists' expectations for a 4.1 per cent increase.
The index measures movement in underlying wages by calculating the change in the wage and salary cost of a basket of jobs.
WA led the states with a 5.6 per cent rise over the year, followed by South Australia (4.6 per cent), Northern Territory (4.3 per cent) and Victoria (4.1 per cent).
Industry wise, pay packets in the mining sector grew by 6.7 per cent over the year, followed by property and business services, up 5.4 per cent and construction, up 4.7 per cent.
Industries with the slowest annual wage growth were accommodation, cafes and restaurants, up 2.2 per cent, and electricity and gas, which grew by 3.1 per cent.
The wage growth was in line with consumer sentiment which moved away from 16-year lows by rising 9.1 per cent in August.
The wage rise is good news for home owners according to economists, who say the Reserve Bank of Australia remains likely to cut interest rates next month.
St George Bank economist Jo Heffernan said the figures were no barrier to a rate cut in September by the RBA.
"Today's data indicates that wages inflation, at relatively contained levels, should not present an impediment to the RBA as it begins to enter a rate cutting cycle," Ms Heffernan said.
"Although inflation remains at high levels, recent weakness in economic growth indicators has seen the RBA shift its focus, so that the growth outlook is now more concerning."
ICAP senior economist Adam Carr said the central bank would not be greatly concerned by the data.
"It's not an overly strong number, and with employment growth slowing and general economic malaise you probably wouldn't expect acceleration from here," Mr Carr said.
The RBA raised the cash rate four times between August last year and March in a bid to slow the economy and bring inflation down.
The RBA has been on the sidelines for the past five months, with the cash rate steady at a 12-year high of 7.25 per cent.
However, the central bank indicated recently that there was increasing "scope" for lowering interest rates due to slowing domestic demand.
RBC Capital Markets senior economist Su-Lin Ong said despite the larger than expected increase, annual wages growth remained within a "well-defined range of recent years".
"With the exception of one quarter, annual growth has been between 4.0 and 4.2 per cent for the last three years and today's print is in line with recent history," Ms Ong said.
"While today's data may argue against a more aggressive 50-basis point cut in September, a 25-basis point move looks likely."
The RBA board's next regular monthly meeting is on Tuesday, September 2.
