Job site SEEK’s advertised salary index recorded its most sluggish monthly rise since December 2021, up 0.2%.
January's figure came in well below the 0.5% monthly growth rate between July and September last year.
However, salary growth in the past year to January remained strong, up 4.5%, slowing from the annual rate of 4.8% recorded in the year to September.
Labour market cooling
The slowdown in advertised salaries is in line with Australia’s latest official jobs data which shows unemployment is starting to trend higher.
January’s official unemployment rate of 4.1% marked the first time unemployment ticked over 4% in two years, well up on the 3.5% annual rate recorded in June.
SEEK’s senior economist Matt Cowgill said a cooling labour market is affecting salary growth.
“With unemployment rising, and with fewer jobs advertised than a year ago, employers aren’t having to compete quite as hard for talent to fill vacant roles, lessening the need for wage increases for new hires,” Mr Cowgill said.
The rise in unemployment also follows a year of record immigration to Australia, with a net migrant intake of 518,000.
Salary winners and losers
The biggest salary increases over the 12 months to January were seen in the community services sector at 8.9% growth, according to SEEK, largely reflecting the Fair Work Commission’s decision to raise wages for aged care workers.
This had a notable effect on SEEK’s data in July and August although recent growth has been more modest at around 1.5%, Mr Cowgill said.
Teachers also saw robust salary growth at 6.2%, driven by strong demand.
At the other end of the scale, IT jobs continued to experience relatively weak growth in advertised salaries, growing 1.9% over the year.
Of the states and territories, Tasmania recorded the highest rise in salaries over the year, up 5.6%, with less populous states generally showing the fastest growth.
Both New South Wales and Victoria were marginally behind the pace, at 4.3% and 4.4% respectively, reflecting more modest job ad growth in the major markets.
Wages rising faster than inflation
SEEK’s advertised salary index also supports official ABS data that showed wages grew 4.2% in 2023, the highest annual increase in more than 15 years.
December wages data was also the first time since March 2021 that wages recorded higher annual growth than inflation at 4.1%.
However, just as in the SEEK data, wages growth slowed in the December quarter to 0.6%, half of the previous quarter’s growth rate of 1.2%.
It comes on the back of Treasury analysis showing pay rises overtook import costs and supply issues as the main driver of inflation in the June quarter.
Reserve Bank of Australia modelling suggests nominal wages will continue to grow faster than inflation.
The RBA says returning inflation to target, between 2-3%, remains its highest priority.
"The path of interest rates that will best ensure that inflation returns to target in a reasonable timeframe will depend upon the data and the evolving assessment of risks, and a further increase in interest rates cannot be ruled out,” the RBA said after its February board meeting.
The next RBA board meeting is on 18-19 March.
Image by John Kotliarskyi on Unsplash
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