July 13, 2021

NAB Insights from the Preliminary Q2 Quarterly Business Survey: July 2021

Wages growth and expectations.


  • The special questions on wages growth in the last six months sees a relatively low proportion of employers saying that they have given pay rises – around 50% – but more in manufacturing and construction.
  •  On expectations for the next 6 months, the expectations of pay rises being given rises to 70% with the highest being in finance, property and business services as well as manufacturing and construction.
  • While up significantly – suggesting the bottom of the growth in wages might be behind us – it is not that different from responses to the same question 3 years ago. As a result, some caution is required here.
  • Looking at the quantified wages costs questions some simple relationships suggest that the WPI will move up significantly in H2 2021 – approaching 1% per quarter.
  • More detailed modelling, however, suggests that that rate of increase will likely be temporary and it won’t be till late 2023 till more sustained increases in the wages momentum are experienced. At a time when the unemployment rate is expected to be nearer 4.25% (based on NAB forecasts).

For more information, please see the report on Wages growth and expectations – Insights (July 2021)

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