Australia Wages Growth Remains Modest in 3Q

Australian wage growth has come in well below expectations, again.

"A further reduction in the unemployment rate is clearly required before we see a more sustained rise in wage growth", she said. It was marginally above the 1.94% level reported in the June quarter.

Australian wages accelerated by less than expected in the third quarter, despite a bump in minimum wages that economists had expected to lift the pay packets of around a quarter of workers.

Like many other countries, Australia's job market has tightened, but as yet it is not generating meaningful wages gains or inflation pressures.

"But there remains a high degree of slack in the labour market and that keep wage growth relatively low for the foreseeable future".

After seasonal adjustments, private sector wages grew by just 1.86% over the year, outpaced by a 2.37% increase for public sector workers.

Public-sector wages rose 0.5% in the quarter and rose 2.4% from a year earlier. Those for private sector workers increased by a larger 0.54%.

In original terms, through the year wage growth to the September quarter 2017 ranged from 1.2 per cent for the Mining industry to 2.7 per cent for Health care and social assistance and Arts and recreation services.

Queensland's average wage is at its highest point since 2015 and the state's growth is ahead of the national average.

Callum Pickering, APAC economist at Indeed, said today's report makes it hard to justify the need for higher interest rates in Australia.

The prospect of low wages growth, and therefore low inflation, for a longer period weighs on the prospect of Australian interest rate rises, which has knocked the stuffing out of the Australian dollar.