Aussie wages disappoint ahead of key jobs data tomorrow

• Australia Wage Price Index for Q4 2018 arrived at 0.5% q/q vs the expected 0.6%, which is yet another data input that will weigh on the Aussie. 

As noted from yesterday’s meeting minutes, the RBA Board said that, “Tightening labour market conditions were expected to put upward pressure on wages, although to date wages growth in Australia and elsewhere had been slower to pick up than in previous expansions.” 

Analysts at Westpac noted that the annual growth in the wage price index fell from above 4% pre-GFC and above 3.5% in 2011-2012 to just 1.9% in 2016-2017, the slowest wages growth by any measure since at least the early 1960s. It edged back to 2.3%yr in Q3 2018, with Westpac forecasting 0.6%qtr, 2.3%yr in Q4, in line with consensus. 

This time around, the RBA has been yet again overly optimistic.

Next up will be Aussie jobs to round off what has been a flurry of negativity for the Aussie of late. 

"We see wage growth chipping away at rate cut expectations. We look for +0.7%/q and 2.44%/y, and closer to 2¾%/y by year-end. For Jan employment our +20k and a steady 65.6% participation rate leaves the unemployment rate at 5.0%. An average of +20k/m leaves the u-rate steady at 5% by year-end, the RBA’s f/c. The Bank will be concerned if it creeps back towards 6% again,"

analysts at TD Securities explained.