SYDNEY, Feb 22 (Reuters) - Australian wage growth stayed stuck at record lows last quarter amid subdued demand for labour, a drag both on household spending power and on the course of inflation.
The Australian Bureau of Statistics said on Wednesday that its wage price index rose just 0.5 percent in October-December, in line with forecasts and compared with 0.4 percent the previous quarter.
Annual wage growth held at 1.9 percent, the lowest on record. That was less than half the wage growth rate workers enjoyed a decade ago when a mining boom boosted pay across Australia.
The slowdown contributed to an unwelcome decline in inflation, which also hit all-time lows, and was a major reason the Reserve Bank of Australia (RBA) cut interest rates twice last year to a record low of 1.5 percent.
The central bank has since argued that wage growth had finally bottomed, with its liaison with firms suggesting the constant downward pressure on labour costs was easing.
Earlier on Wednesday, RBA Governor Philip Lowe indicated that cutting rates further would not be in the “national interest” as the central bank walks a tight rope to balance growth against the risk of a debt-fuelled boom and bust.
The ABS also released data showing home building rebounded 1.3 percent in the quarter to A$26.7 billion, after unexpectedly slumping 3.9 percent in the previous three months. The third-quarter number was revised from a drop of 5.7 percent.
Total construction work still fell 0.2 percent in the fourth quarter, after a 4.4 percent drop in July-Sept, to stand at A$46.26 billion.
The rise in building work added to expectations the economy as a whole bounced back in the fourth quarter after a shock contraction the previous quarter, although the scale of the recovery might not be as great as first hoped.
Australian steel maker BlueScope Steel, which serves the construction industry, was sanguine about the outlook for building after reporting a trebling in its half-year underlying profit.
“My view is there’s a few years to run in that construction process. And our customers are saying that they are continuing to see very strong demand in that space,” Managing Director Paul O‘Malley told reporters. (Reporting by Swati Pandey; Additional reporting by Sonali Paul in Melbourne)