Aussie Pressured by Sluggish Wages; China Reports Miss ForecastsThe AUD/USD hit a new low for the session at .6922 following the release of the economic reports. Prices retreated as the wages miss added further weight to the case for a Reserve Bank of Australia rate cut. While the slew of economic data from China was positive, they call came in under the forecasts.
Slow Australian wage growth in the first quarter continued to keep the pressure on the Australian Dollar early Wednesday. The weakness was primarily driven by a poor showing in public sector wages.
According to the Australian Bureau of Statistics (ABS) Wage Price Index (WPI), average hourly wages excluding bonuses rose by 0.54% after seasonal adjustments, undershooting expectations for a larger increase of 0.6%.
Although the quarterly number missed the estimate, average wages growth on an annual basis actually accelerated a little, increasing by 2.34%, up from 2.27% in the December quarter. It was the fastest increase since the December quarter of 2014 although marginally below the 2.4% rise forecast by the RBA.
With consumer price inflation growing by just 1.3% over the same period, real wages growth over the year stood at a respectable 1%.
The report also showed average private sector wages rose 0.54% over the March quarter, the same pace seen in the three months to December last year. That left average wage growth over the year at 2.35%, the fastest increase since the final three months of 2014.
Finally, in contrast to the private sector, average public sector wages grew by a slower 0.45% last quarter, down from 0.6% in late 2018. It was the weakest quarterly increase since early 2000.
From a year earlier, public sector wage growth slowed to 2.37%, well below the 2.53% level seen in the December quarter.
China Reports Miss Forecasts
In China, Fixed Asset Investment came in at 6.1%, below the 6.4% forecast and lower than the previously reported 6.3%.
Industrial Production rose 5.4%, missing the 6.5% forecast. The previous report showed an 8.5% increase.
Retail Sales were higher by 7.2%. Traders were looking for 8.6%. This was also lower than the 8.7% previously reported.
The Unemployment Rate was the only positive, coming in at 5.0%, a drop from 5.2%.
Australian Dollar Pressured
The AUD/USD hit a new low for the session at .6922 following the release of the economic reports. Prices retreated as the wages miss added further weight to the case for a Reserve Bank of Australia rate cut.