AUSTRALIA: Q4 Wages Data Mixed Following Sharp Rise In Q3 Compensation
The RBA stated as part of its December decision to leave policy on hold that while the wage price index “has eased from its peak” other “broader measures” were showing “strong growth”. Many measures are quarterly and thus backward looking but Q4 monthly data to date have been mixed.
- November SEEK advertised salaries rose 3.8% y/y up from 3.6% and the highest since September 2024. 3-month annualized momentum picked up to 4.0% from 3.7% and has been trending higher since the August trough.
- Q4 average SEEK salaries rose 3.7% y/y up from Q3’s 3.4% and is signaling a pickup in Q4 WPI growth, which won’t be released until 18 February. This is likely to concern the RBA which is forecasting it to hold at 3.4%.
Australia wages growth ex bonuses y/y%
Source: MNI - Market News/ABS/SEEK
- While SEEK salaries are indicating higher wage inflation, NAB’s business labour costs slowed in Q4. The 3-month change moderated 0.1pp to 1.4% in November. The Q4 average is currently at 1.4% down from both Q3’s 1.8% and Q2’s 1.6%.
- The RBA was likely worried about the sharp rebound in average compensation per employee in the Q3 national accounts which rose 1.8% q/q and 5.4% y/y. This was up from 4.0% y/y in Q2 and the highest annual growth rate in two and half years.
Australia average compensation per employee y/y%
Source: MNI - Market News/ABS
- It has been worried about unit labour costs for some time which rose 1.3% q/q and 4.9% y/y in Q3, the strongest in over a year.
- Easing WPI growth appears to have stalled mid-year with both Q2 and Q3 rising 0.8% q/q and 3.4% y/y. However, the last RBA statement showed that the Board has a range of wage indicators that it considers.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
RATINGS: Moody's Upgrades Italy To Baa2 From Baa3, Still A Notch Below Others
The Moody's upgrade to Italy's credit rating announced late Friday was the first from the agency since 2002 but shouldn't be considered a major surprise. Among the 3 major ratings agencies, Moody's had the lowest rating on Italy - by two notches (Fitch and S&P both BBB+).
- So this upgrade to Baa2 from Baa3 represents something of a closing of that gap rather than a major breakthrough for Italy.
- From the release:
- "The rating upgrade reflects a consistent track-record of political and policy stability which enhances the effectiveness of economic and fiscal reforms and investment implemented under the National Recovery and Resilience Plan (NRRP). It also points to prospects of further policy actions supporting growth and fiscal consolidation beyond the plan's deadline in August 2026. As a result, we expect that Italy's high government debt burden will gradually decline from 2027 onwards."
FED: Heading Into Its Final Weeks, QT Pace Remains At $20B/Month (2/2)
On the asset side of the Fed balance sheet, we saw a $25B drop in assets, of which just $2B could be attributed to QT in one of its final weeks (ends Dec 1).
- Instead it was a $6B drop in dealer repo operations vs a week earlier, and $17B in "other" areas that aren't related directly to monetary policy and typically don't have any significant impact on the size of the balance sheet (such changes are largely due to items such as bank premises, accrued interest, and other accounts receivable.)
- Discount window takeup edged up $0.3B to $6.1B but remains relatively low.
- QT has totaled just under $21B over the last month, around the expected pace, though as noted this will flatline in December with a pickup in net bills as MBS proceeds are rolled over into T-bills.
LOOK AHEAD: US Week Ahead: Retail Sales, PPI & Claims Headline Thanksgiving Week
A Thanksgiving-condensed week sees data highlights from delayed retail sales and PPI reports for September on Tuesday (Nov 25) before a Wednesday release for weekly jobless claims (Nov 26). Aside, the Fed’s Beige Book should also offer another important update on Wednesday for latest liaison reporting, with no Fedspeak currently scheduled around the holiday and the FOMC media blackout due to start on Saturday, Nov 29.
- As we regularly comment in this weekly publication, Redbook and Chicago Fed CARTS indicators point to solid nominal growth in retail sales, something broadly reflected in analyst consensus for the release.
- PPI inflation will offer a useful albeit not overly timely update on input cost pressures.
- Jobless claims will be watched particularly closely, both for latest initial claims for signs of layoffs and a notable update for continuing claims. The latter covers the payrolls reference period for November and will be an important reference point for FOMC members trying to get a sense of latest unemployment rate clues with the next payrolls reports coming after the Dec 9-10 FOMC decision (going into it with this week’s 0.12bp rise to 4.44% back in September).
