WA wages growth slow

Wages growth in Western Australia is lagging the country, with ABS data showing the state's wages increased just 1.6 per cent year on year, compared with a national increase of 2.3 per cent.

ABS chief economist Bruce Hockman said national wage growth, seasonally adjusted, was led by public sector wages, which were up 2.5 per cent through the year to September, compared with private sector wages, which rose 2.1 per cent.

He said the 2.3 per cent growth in national wages was the highest growth rate since the 2015 September quarter.

"There was a higher rate of wage growth recorded across the majority of industries in comparison to this time last year, reflecting the influence of improved labour market conditions," Mr Hockman said.

AMP Capital chief economist Shane Oliver cautiously welcomed the results, which show wages growth has continued to lift from its 2016 low point of 1.9 per cent.

“However, the lift in wage growth largely owes to a faster increase in the minimum wage for 2017-18 of 3.3 per cent, which was up from 2.4 per cent for the previous year, and now to a rise of 3.5 per cent for this financial year,” Mr Oliver said.

“Were it not for the acceleration in minimum wage increases, wage growth would still be running at around 2 per cent, so there is still little evidence of significant pick-up in underlying wage growth.

“Fortunately, the uptick in wage growth to 2.3 per cent when inflation is just 1.9 per cent means that real wage growth is at least positive.

“That said at 0.4 per cent year on year real wage growth is still very small and won’t provide much of a boost to consumer spending.”

Year-on-year wages growth was strongest in Tasmania (2.6 per cent) and Victoria (2.5 per cent), while growth was weakest in Northern Territory (1.7 per cent) and WA (1.6 per cent).

By industry, wages growth was strongest in health at 2.8 per cent and weakest in mining and retail trade, which both recorded growth of 1.8 per cent.

CommSec senior economist Ryan Felsman said the data was confirmation that wages growth had bottomed and should continue to gradually lift as the labour market tightened, particularly when bonus payments were considered.

“Wages are up 2.7 per cent on a year ago if bonus payments are included, well ahead of the 1.9 per cent headline inflation rate,” he said.

“As always, it is important to relate wages to prices – wage growth is slower than in the past, but so is price inflation.”

Mr Felsman said the wages growth figure was in line with market expectations, and CommSec did not anticipate a change in interest rates until late next year.