Analysts were expecting a healthy third quarter wage price index print yesterday of about +1% seasonally-adjusted. But the consensus was that this was going to be largely explained by the recent minimum wage increase. One bank estimated that about 0.5% of the rise would be accounted for by the minimum wage changes. It turns out, however, that the ABS sought to explicitly control for this (see below). This suggests that the third quarter saw a very substantial acceleration in private wages, which is consistent with the gradual decline in the (rather noisy) unemployment rate and the uber-strong total employment growth numbers. This is what two banks had to say:
Westpac: "The Q3 result was expected to be biased up by Fair Work Australia's decision to lift the minimum wage 4.8% in Q3 (after no increase in 2009). However, the Statistician has allowed for the changed timing of minimum wage decisions and the lack of increase in 2009 with seasonal reanalysis and a trend break."
Citi: "Note that the ABS advised that private sector wages growth was not due to the $A26 per week increase in the minimum wage awarded by Fair Work Australia increase. This was accounted for in the seasonal adjustment mechanism."
