Australian wage growth accelerates to 3.4% amid tight labor market conditions

Australian wage growth in the first quarter exceeded expectations. Analysts at Bloomberg see this as evidence of a tight labor market in the country. Wage growth during said period reached 3.4% year-on-year and 0.9% quarter-on-quarter.

The Australian Bureau of Statistics reported that annual wage growth climbed for the first time since June 2024. In response to this data, the Australian dollar strengthened, and markets continued to anticipate monetary policy easing next week. Traders are also predicting two more interest rate cuts by December. If their assumptions are correct, the cost of borrowing in the country will reach a two-year low of 3.85% after the May 20 meeting.

As Reserve Bank of Australia representatives stated earlier, a wage growth rate of about 4% aligns with the inflation target of 2–3%. However, according to RBA Governor Michele Bullock, a favorable outlook requires a simultaneous improvement in labor productivity. Currently, there is no sign of a steady rise in the indicator.

Citing market expectations, Bloomberg reports that unemployment in the country will remain at 4.1% in April.