'Wages growth has passed its peak,' RBA says
Wages growth is anticipated to decline to 3.4% in December 2024, according to the latest forecast of the Reserve Bank of Australia (RBA).
The RBA's Statement on Monetary Policy said the country's wages growth has passed its peak and is expected to slow down until 2026.
Its Wage Price Index forecast indicates a slowdown to 3.4% in December 2024, which is expected to further slow to 3.2% by December 2025, and then 3.1% by December 2026.
"Wages growth has passed its peak and is expected to slow further as the labour market eases," the RBA said in its statement.
"Further easing in the labour market is also expected to continue to put downward pressures on wages, consistent with information from liaison that employers expect a further slowing in wages growth in the coming year."
The forecast on wages comes as the RBA also said it is expecting the labour market to continue easing over the next year before stabilising at a level consistent with full employment.
"The unemployment rate is forecast to increase further over coming quarters, consistent with the recent easing in some leading indicators of labour demand, including job vacancies and employment intentions," the RBA said.
It expects the unemployment rate to stabilise at around 4.5%, consistent with the staff's estimates of full employment.
According to the RBA, the growth in employment and the labour force are also expected to ease in the medium term.
"Participation in the labour force, which has been higher than expected in recent months, is now judged to pick up a little more in the near term, reflecting solid employment opportunities as well as cost-of-living pressures faced by households," it said.
Later on, however, it is expecting the increase to become very gradual as the increased participation of women and older workers offset the number of workers leaving the labour force.
Australia's unemployment rate is at 4.1% as of September 2024, with the participation rate at 67.2%, according to the latest data from the Australian Bureau of Statistics.
