AUD/USD Ignoring the Fastest Pay Growth in Australia Since 2010

Today’s wages numbers from Australia showed a nice jump in January, overtaking the increase in inflation, which takes us to normal times, when earnings were growing faster than price hikes. However, the AUD to USD ratio is holding stable, showing that the retreat in the USD might be over.

Australia Wage Price Index for Q4

Today’s data from the Australian Bureau of Statistics reveals that wages in the fourth quarter of last year experienced their fastest annual growth rate in fifteen years, but AUD/USD is stagnating just below the 200 SMA (purple) which is acting as resistance on the H4 chart. This surge in wages can be attributed to intense competition for workers and a low unemployment rate in the country. Specifically, salaries increased by 0.9% in the December quarter, which aligns with market expectations.

The previous quarter had seen a record 1.3% increase in wages, driven by significant minimum pay awards. Moreover, due to upward revisions to historical data, the annual growth rate of wages rose to 4.2% from 4.1%, marking the highest level since early 2009.

Unemployment Report for January

Last week the unemployment rate rose to 4.1% in January, marking a two-year high, after previously standing at 3.9% in December. The Australian Bureau of Statistics (ABS) attributed this rise to a weakening economy and subdued consumer demand, indicating a more relaxed labour market environment. Additionally, the Australian Employment Change for January fell short of market expectations, with only 0.5K jobs added compared to the consensus forecast of 30.0K. This figure also showed improvement from the previous month’s data, which reported a decline of 65,000 jobs.

In December, the Australian economy experienced a significant loss of jobs, with more than 65k positions wiped out. Notably, full-time employment saw a substantial decline of more than 100k jobs, while part-time employment increased by more than 40K positions. These figures indicate a challenging labor market situation during that period.

However, market expectations for the upcoming employment change data suggest a potential rebound, with a consensus estimate of 30K jobs added. This anticipated improvement in job creation could have notable implications for monetary policy decisions, as the central bank has indicated its reliance on economic data to guide interest rate policies.

AUD/USD Live Chart