As it stands | Wage Price Index
The headline Wage Price Index (WPI) matched consensus in the March quarter coming in at 0.5%q/q for the 5th consecutive quarter (review here). This slowed the annual pace to 2.1% from 2.2%, its softest since Q2 2018. Private sector wages growth went nowhere at 0.5%q/q and 2.2%Y/Y, though in the public sector the quarterly pace lifted from 0.4% to 0.6% to drive annual growth higher from 2.2% to 2.4%.
Ahead of the full disruption from the pandemic, the signs were evident that wages growth had already lost momentum, both at the index level and also on an industry-wide basis. By the end of the March quarter, annual growth in the WPI had pulled back to 2.1% from 2.3% a year earlier, while wages growth had also slowed in the majority of industries over the period.
Market expectations | Wage Price Index
Estimates for today's figure on the quarterly WPI are split between -0.3% and +0.5%, which is an unusually wide range for this report reflecting the uncertainty of the situation. The consensus forecast is for the WPI to lift by 0.3% in Q2, which would see the annual pace easing back to its weakest levels in around 3 years at 1.9%.
What to watch | Wage Price Index
The ABS has published a note discussing the impacts of the pandemic on these data (see here). Key to note is that the Federal Government's JobKeeper policy will not have any direct impact on the WPI as wage subsidies fall outside the scope of measurement of the index. The data provided by employers will be inclusive of JobKeeper payments, with the ABS then making the necessary adjustments to remove their impact on the WPI. To account for the impact of the JobKeeper payments (and other payroll tax changes), the ABS advises that it will be publishing two additional indexes in today's report; the Labour Price Index (wage costs inclusive of JobKeeper payments and payroll tax changes) and hourly income growth (including JobKeeper payments where relevant).
The ABS has published a note discussing the impacts of the pandemic on these data (see here). Key to note is that the Federal Government's JobKeeper policy will not have any direct impact on the WPI as wage subsidies fall outside the scope of measurement of the index. The data provided by employers will be inclusive of JobKeeper payments, with the ABS then making the necessary adjustments to remove their impact on the WPI. To account for the impact of the JobKeeper payments (and other payroll tax changes), the ABS advises that it will be publishing two additional indexes in today's report; the Labour Price Index (wage costs inclusive of JobKeeper payments and payroll tax changes) and hourly income growth (including JobKeeper payments where relevant).
