Aussie wages. US economic growth and inflation.

All roads lead to inflation in the current environment. So the key indicator to watch is the coming week in Australia is the wage price index (WPI), a key influence on inflation. The report is slated for release on Wednesday.

In the September quarter wages rose by 1 per cent, taking the annual rate to a decade high of 3.1 per cent. Based on the SEEK data, the WPI probably rose 1.0 per cent in the December quarter, taking annual growth to 3.4 per cent. Annual wage growth is on track to levels around 4.5 per cent.

The Reserve Bank (RBA) would be happy to see annual wage growth of 4.0-4.5 per cent but not so happy if it is much higher. The RBA contends that 4 per cent wage growth is consistent with 2.5 per cent inflation and 1.5 per cent productivity.

If the wage cost index records a slightly smaller lift than the consensus reading, say around 0.9 per cent, investors and the Reserve Bank would be satisfied with the outcome.

The other important reading is Private Capital Expenditure (or business investment) to be released on Thursday. The data is important for the Industrials sector and also highlights activity in other sectors of the economy like mining.


Top Australian Brokers


In the US, there are a number of indicators vying for attention including economic growth (Thursday) and the personal income/spending report on Friday, a report that includes a key price or inflation measure.

In Australia the profit-reporting or earnings season continues. The earnings calendar and reports on some of the
key earnings announcements can be found


Upcoming Economic and Financial Market Events

Tuesday 21st February

  • Minutes of last Reserve Bank Board – meeting Meeting held on February 7
  • Weekly consumer confidence – From ANZ & Roy Morgan
  • ‘Flash’ Purchasing managers’ indexes (February) – Insights into the business sector

Wednesday 22nd February

  • Wage price index (December quarter) – One of the key gauges of wages
  • Construction work done (December quarter) – Latest update on construction activity

Thursday 23rd February

  • Business investment (December quarter) – Guide to business spending
  • Detailed Labour force (January) – Geographic and regional estimates
  • Average weekly earnings (November) – Provide dollar estimates of wages


Originally published by Craig James, Chief Economist, CommSec