ANZ Research thinks the recent labour market result will also cement the RBA’s upcoming decisions at its July meeting to not roll the yield target from the April 2024 bond and to shift to “flexible” quantitative easing from September.
Along with the drop in unemployment, underemployment has fallen 1 percentage point over the past three months to 7.4 per cent. The shrinking pool of underemployed workers is likely to be an important catalyst for businesses to lift wages as they have less “available” labour to draw on quickly.
Underemployment has been a much better predictor of wages growth over the past cycle. It is now at its lowest rate since Q1 2014, when wages growth was 2.7 per cent year-on-year.