Big week ahead for the Australian economy and markets. The first-quarter economic growth will be out midweek, but before then, the 2024 National Wage rise will be revealed later today (Monday).
That will likely see a smaller rise than the 8.65% increase last year and a 5.7% rise in minimum wages.
The National Wage decision directly impacts around 21% of the country’s 14 million or so workers.
AMP’s chief economist, Shane Oliver, says the 2023 rises added around 0.7% to wage growth and helped the Wage Price Index rise to its current level of 4.1%.
The ACTU wants a 5% rise, and industry wants a smaller increase, just below 3%. The eventual outcome will probably be around 3.5% to 4%.
But the more interesting decision will be the Fair Work Commission’s response to the ACTU claim for an extra 4% wage rise for female-dominated employment sectors.
The wage decision will generate a lot of the usual hot air from both sides, but businesses will be secretly happy with a wage rise if workers start spending it.
It will go with the tax cuts and $300 energy rebate from the Budget and should boost household income in the coming months, though many households will save rather than spend because of the rising uncertainty.
The weak March quarter national accounts and GDP reading will underline the need for some stimulus for consumer spending. Retail sales are now lower in value and volume than they were at their most recent peak last November.
As well, retail sales in real terms have fallen in the past year, and the longer this goes on, the more damage it will do to retailers and their employees, especially.
The National Australia Bank on Friday forecast no growth in the quarter and an annual rise of just 1%. That would be after the 0.2% quarter-on-quarter rise in the three months to December and an annual rate of 1.5%.
AMP’s Shane Oliver thinks there will be another quarterly rise of 0.2% and an annual rate of 1.2%.
The final outcome will depend on the contribution from trade. The way the goods surplus shrank in the quarter and especially the sharp rise in imports suggests the external account could be negative.
Business investment was stronger in the quarter than in December, especially investment in data centers and the plant and machinery needed for this growing sector.
Government financing activities will be the usual imponderable, as will the reading for inventories, which will probably be the swing item. They dragged growth down by 0.3% in the three months to December, but they usually rebound in the next quarter or two.
Certainly, another three months of falling income per capita is on the cards.