Wage growth looks likely to plunge to record lows thanks to the steep downturn in employment during the coronavirus pandemic.
The latest wage price index – used by the Reserve Bank and Treasury to gauge wages growth – is expected to show a slim 0.3 per cent rise in the June quarter.
This would take the annual rate below two per cent, compared with the 2.1 per cent reported three months earlier.
A record low of 1.8 per cent was set in 2016/17.
Such a result will hardly inspire an already glum consumer, concerned by the spread of coronavirus and harsh restrictions imposed on Victoria.
The monthly Westpac-Melbourne consumer sentiment survey, which is also released on Wednesday, is expected to show a further weakening in response to Melbourne’s lockdown.
The more frequent weekly ANZ-Roy Morgan consumer confidence gauge has dropped 2.4 per cent, it’s seventh straight period of decline.
The National Australia Bank monthly business survey also showed confidence tumbling into negative territory, suggesting governments may need to extend supports until the economy is back on its feet.
ANZ senior economist Felicity Emmett expects Victoria’s restrictions will limit the national economy’s expansion in the September quarter to a modest 0.6 per cent, having previously forecast 1.8 per cent growth.
Melbourne’s output accounts for nearly 20 per cent of national gross domestic product.
However, for the December quarter, Ms Emmett is now predicting a 0.8 per cent rise, up from an earlier expectation of a 0.4 per cent fall.
Her revised estimate is based on the extension of JobKeeper and JobSeeker payments.
But she warns in a note to clients, the risks to the outlook remain tilted to the downside.
“The assumptions underpinning our forecasts are that the virus cases gradually reduce in Victoria, that case numbers stay low in NSW, and remain close to zero in the other states and territories,” she said.
“We would have to downgrade our numbers if a third wave eventuates, or NSW experiences a second wave and/or tighter restrictions.”
Overall, the Reserve Bank is expecting annual growth will be down six per cent as the nation suffers its first recession in almost 30 years.