WEEKLY E-MAIL

4 March 2025

WAGE GROWTH SLOWDOWN

By Rebecca Dhillon

Data released from the Australian Bureau of Statistics this month shows wage growth in Australia has slowed over the past 12 months to 3.2%, up just 0.7% in the December quarter – the slowest quarterly wage growth since March 2022.

The data was released just one day after the Reserve Bank of Australia (RBA) cut interest rates for the first time in four years and reflects the RBA’s confidence that inflation had slowed enough to warrant a rate cut.

Quarterly and Annual WPI movement (seasonally adjusted)

Source: Australian Bureau of Statistics

While both public and private sectors experienced a slowdown, the public sector slowdown was more significant, falling to 2.8% compared to 3.3% for the private sector.

Source: Australian Bureau of Statistics

Historically, the private sector is the main contributor to wage growth due to the number of employees and total wage expenditure, with the latest data showing that public sector wages have now grown more slowly than the private sector for 13 of the last 15 quarters.

The latest wage data provides valuable insights into the economic landscape, with many economists now suggesting that a slowdown in wage growth, with no loss of employment, means the economy could sustain a lower unemployment rate than previously thought.

According to Commonwealth Bank economist Stephen Wu “The latest drop in wage price pressures highlights that the evidence continues to favour a lower non-accelerating inflation rate of unemployment than the RBA’s 4.5% assumption.”

While softening wage growth is good news for mortgage holders hoping for further interest rate cuts this year, RBA governor Michele Bullock has made it clear that the Board will not rush any decisions around further rate cuts without being certain that inflation is descending to its target of 2% – 3%.

Rebecca Dhillon
Senior Para-Planner
Authorised Representative No. 453075

If you have any questions or comments, please email me at rebecca@gfmwealth.com.au

Disclaimer: This document is not an offer or invitation to any person to buy or sell any interest in or deposit funds with any institution.  The information here is of a generic nature, and does not take into account your investment objectives or financial needs.  No person should act upon this information without firstly seeking competent, professional advice specifically relating to their own particular situation.

Copyright: © This publication is copyright. Subject to the conditions prescribed under the Copyright Act, no part of it may, in any form, or by any means (electronic, mechanical, microcopying, photocopying, recording or otherwise) be reproduced or transmitted without permission. Enquiries should be addressed to GFM Wealth Advisory.