Wage pressures remain muted as hopes for sustained faster growth fade, given that pro-growth policies from Washington are looking less likely by the day.
While
wage pressures remain modest, core inflation is below target and inflation expectations are contained almost everywhere, the implication is that they should all rise over time.
Although most indicators of
wage pressure remained firm in the September quarter, there was only limited evidence to suggest that these pressures were gaining economy - wide momentum.
Not exact matches
You may see inflation
remain below target, you may see a lack of
wage pressures, and you could be in a relatively steady state like that for some time possibly.
Core inflation
remains a steady bit less than 2 %, and wages were thus climbing only.5 % on their own power of traditional
wage pressure.
That suggests that underlying inflation
pressures from such things as
wage increases
remain muted.
CITI: Given continued soft inflation readings, average hourly earnings (AHE)
remains the focus of the payrolls report as markets look for evidence that
wage pressures are building.
Aggregate
wage pressures have since firmed, particularly in the private sector, although
wage growth
remains below its immediate pre-crisis levels (Figure 10).
Also, the need for interest rates to rise will be lessened to the extent that inflation expectations
remain well anchored and
wage pressures in stronger parts of the economy do not spill over to other parts.
Even
wage growth (which operates with a lag) is starting to move higher while underlying inflation
pressures remain persistent.
While overall
wage costs
remain contained at present, despite
pressures in particular sectors, ongoing strength in demand would pose an increasing risk of acceleration of costs over time.
Most indicators of aggregate
wage growth
remained firm in the December quarter, though there are few signs that the strong
wage pressures evident in some sectors are becoming generalised.
While aggregate
wage growth
remains contained, official
wage statistics and liaison have pointed to greater
wage pressures in industries facing strong demand, such as construction and mining (Graph 59).
We have been decreasing our USD hedge ratio, but the overall level
remains high as a reversal in recent inflation softness and a pickup in
wage pressures could trigger support for the US dollar.
Consumer price inflation is expected to
remain well contained, with moderate
wage pressures and the removal of the carbon tax.
The key issue in 2018 is whether these people return to the labor force, boosting employment growth but keeping wages in check, or
remain out of the labor force, allowing
wage pressures to build?