Wage data was released last week, with the wage price index rising 3.6% nationally over the year to June. This came in a tick under expectations and is also 0.1 percentage points lower than the March quarter reading of 3.7%. Western Australia saw even greater growth, with wages rising 4.2% for the year to June, up from 4.1% in March. This remains the highest reading of all states and is now the fastest pace of wages growth in more than a decade. Given the significant bump to the national minimum wage is yet to be captured in this data, the pace of wages growth could pick up again next quarter.
Unemployment rate falls in WA
Labour data also dropped last week, showing the jobs market – despite easing slightly – continues to remain tight. Australia’s unemployment rate rose to 3.7% in July, up from 3.5% in June. In comparison, WA’s unemployment rate fell, returning to 3.4% in July from 3.6% in June. Together with wages data, these unemployment figures should provide the RBA with enough evidence to hold the cash rate at 4.1% when they next meet in September.
Manufacturing remains weak globally
Turning overseas, and global Purchasing Managers’ Index (PMI) data was also released. The PMI provides information on current and future business conditions in the manufacturing and service sectors, where a reading above 50 represents an expansion and a reading under 50 represents a contraction. Globally, manufacturing PMIs remain weak, with most major economies recording a contraction – the US recorded a reading of 47.0, the UK 42.5 and Germany, a manufacturing powerhouse, a deeply contractionary, 39.1. For the UK and Germany, this is now more than a year of continual contraction in their manufacturing sectors, and points to a further slowdown in global economic activity.
For the latest economic reports, see CCIWA’s Economic Insight page.