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.