New data showing the strongest business conditions in at least 21 years suggest further employment gains are ahead, resulting in an eventual lift in wages.
The monthly National Australia Bank business survey released on Tuesday showed employment conditions at a record high, equating to jobs gains of about 27,000 per month.
‘The bottom line is that strong jobs growth will not be ending anytime soon, which is good news for getting the unemployment rate down,’ NAB group chief economist Alan Oster said.
The latest ManpowerGroup employment outlook survey also posted the strongest hiring intentions in six years.
Its managing director Richard Fischer said the strength of the employment outlook across the country continues to bode well for gains in household income over the coming year.
This positive outlook was similarly reflected in a separate survey of manufacturers, which found exporters buoyed by a strong global backdrop and a relatively low Australian dollar.
However, the latest Australian Chamber of Commerce and Industry-Westpac industrial trends survey does note some moderation in new orders in the first months of 2018.
ACCI boss James Pearson said the survey found manufacturers were expecting to pay higher wages over the coming period.
‘That adds to evidence which is starting to build now of a pick-up, gradual but nevertheless a pick-up in the pace of wages growth,’ he told reporters in Canberra.
However, he was concerned that businesses are less optimistic about being able to remain profitable in the next six-to-12 months.
‘Businesses can’t sustain wage growth unless they can sustain their profitability,’ he warned.
He said the cost of energy remains a number one concern among businesses but he also urged the federal parliament to back the remainder of the government’s company tax cut plan.
Despite upbeat conditions, the NAB survey also showed business confidence eased slightly in February, which Mr Oster put down to the turbulence in international financial markets at the beginning of the month.
At the same time, consumer confidence declined in the past week following last week’s national accounts which showed the slowest quarter of economic growth in over a year.
‘Much of the commentary centred on the fact that living standards per person have gone nowhere over the past year, something that may have resonated with the personal experience of many people,’ ANZ head of Australian economics David Plank said.
The weekly ANZ-Roy Morgan consumer confidence index declined 2.5 per cent, partially unwinding gains over the previous fortnight.