16/05/2008 - Wages are rising, latest statistics show, but not enough to cause alarm at the Reserve Bank of Australia (RBA), economists say.
The RBA has been worried high inflation would fuel demand for fatter paypackets, but the second set of wages data in as many days has likely eased those concerns.
On Wednesday, it was a softer-than-expected wage price index (WPI).
Thursday, the Australian Bureau of Statistics (ABS) said average weekly ordinary time earnings (AWOTE) for full-time adult workers rose 1.1 per cent in the three months to February, and 4.8 per cent over the year.
Both sets of numbers have their pros and cons, but add up to "weak" overall wages growth, Lehman Brothers Australia chief economist Stephen Roberts said.
"If you put the two together, the average weekly earnings and the labour price index yesterday, (they) still suggest that wages growth is flatlining," Roberts said.
"You would have had to have seen a something quite a deal stronger in both yesterday's number and this one to really send up the flag that the RBA needs to tighten any further."
At its May 6 board meeting, when interest rates were left on hold, the central bank said inflation was likely to remain relatively high but should decline over time "provided demand evolves as expected".
But it was concerned about wages growth changing that scenario and forcing further interest rate rises.
"Should demand not slow as expected or should expectations of high ongoing inflation begin to affect wage and price setting, that outlook would need to be reviewed," RBA governor Glenn Stevens said.
The RBA reiterated that view in more detail in its quarterly statement on monetary policy three days later.
ICAP senior economist Matthew Johnson said the February quarter result was "tolerable", while the yearly figure was "a little high" and a reminder of the risk posed to the economy by wages pressures.
"These numbers are telling us that wage pressures haven't intensified, but are still quite strong," Johnson said.
Wages growth was strongest in Western Australia, surging 3.7 per cent in the quarter.
"The clear message for young people from the latest wage data is 'go west!'," CommSec chief equities economist Craig James said.
James said the difference in the average wage between WA and New South Wales was the largest since records began 23 years ago.
Average weekly earnings in the mining industry were again strong, rising 7.6 per cent, compared with 7.4 per cent in the previous quarter.
"In the high-flying mining sector, the average wage is just a stone's throw from 100 grand," James said.
Salaries for construction workers posted double-digit growth in the previous quarter but rose at a more modest 6.9 per cent in the three months to February.
ICAP's Johnson cautioned against reading too much into the figures because AWOTE was a very "noisy" set of numbers.
"The RBA prefers the wage price index than the AWOTE numbers, but it has shown itself willing in the last few months to look at the broader measures," he said.
The AWOTE survey measures the level of average earnings in Australia per employee, while the WPI measures wage changes for specified jobs.
Source: AAP NewsWire
