Wage growth has continued to climb higher, with data released last week revealing the Wage Price Index rose 0.8% over the December quarter in Western Australia, bringing total wage growth over the 2023 calendar year to 4.7%. 

This is up from 4.6% last quarter and is now the fastest pace of wage growth since 2012. Wages in Western Australia are also growing at a faster pace than all other states and territories, except for Queensland.

Inflation holds steady over January 

Monthly CPI data released on Wednesday showed annual inflation in Australia has remained steady, rising 3.4% over the year to January. This remains the lowest annual inflation since November 2021.  

The most significant contributors to the increase were housing (+4.6%), food and non-alcoholic beverages (+4.4%), and insurance and financial services (+8.2%). Partially offsetting the increase is holiday travel and accommodation (-7.1%).  

Excluding volatile items such as fruit, vegetables, fuel and holiday travel, inflation was 4.1% for the year to January, down from 4.2% the month prior. This continues the downward trend seen in core inflation since its peak in December 2022.  

Germany manufacturing PMI falls 

In overseas data, Germany’s manufacturing PMI unexpectedly fell to 42.3 in February, down from 45.5 in January and is the lowest reading in four months. This comes after it was predicted the PMI would continue its recent upward trend and hit a reading of 46.1. 

The reading points to another drop in the industrial powerhouse’s manufacturing sector, triggered by fewer new orders on the back of weak demand. Falling input prices and short delivery times highlight the weak demand currently being experienced by the sector. A deterioration in business sentiment among German manufacturers also drove this result, with confidence turning pessimistic for the first time since last November. 

 

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