CBA's James McIntyre is a great economist:
"Average Weekly Ordinary Time Earnings (AWOTE) rose by a softer than expected 1.0% over the 3 months to February 2011. However an upward revision to the previous quarter’s outcome leaves the actual level of earnings slightly above that anticipated by the market. Full-time total earnings grew by a stronger 1.2%, to be 4.1% higher over the year. The divergence suggests some incremental improvement in working average weekly hours between November 2010 and February 2011. This is consistent with the working hours data from the labour force survey.
Growth in average weekly earnings was strongest in the electricity, gas, water and waste services industry (+11.1% compared to a year ago). As would be expected, mining (+5.9%) and construction sector (+6.2%) earnings also grew strongly. There was very strong growth in AWOTE in the transport sector (+7.3% compared to a year ago). Earnings growth was weakest in the administrative services (-1.5% compared to a year ago), wholesale trade (+0.3%) and rental, hiring and real estate services (+0.9%) sectors.
Earnings momentum in the public sector has moderated, following strong growth through 2009 and early 2010. Public sector ordinary time earnings grew 0.9% over the 3 months to February, to be 4.2% higher than a year ago. This trend is consistent with the moderation in the public sector wage price index data released yesterday. Private sector earnings momentum is recovering, with a 1.0% over the 3 months to February following on from a 1.6% increase in the prior period.
Annual growth in wages and earnings continues to exceed inflation, despite the unexpectedly strong QI CPI outcome. Real wages and earnings are rising. The boost to household incomes from rising real wages is being compounded by increases in the number of employees, or wage earners. Both the AWE and WPI outcomes remain consistent with a continuation of the strong household income growth theme that has been playing out for some time. Solid gains in employment and earnings in QI are supportive of a strong improvement in the income side of the QI national accounts. Overlaying the 0.9% increase in average earnings with the 0.3% increase in employment over the March quarter 2011 suggests a strong lift in the wage and salary component of the household income account. Retail spending data (which accounts for around 1/3 of household spending) failed to meaningfully improve against this backdrop of solid household spending capacity gains, suggesting consumers may have diverted income gains towards non-retail spending or savings."
