National Accounts suggest RBA need not rush
The March quarter national accounts do not suggest that the Reserve Bank of Australia (RBA) needs to be contemplating a more aggressive path, according to GSFM.
GSFM investment strategist, Steve Miller, said with the household consumption deflator up 1.5% and the domestic demand deflator up 1.4%, the strongest quarterly rise since 2000, inflation was on the rise.
“That, however, is old news,” he said.
Miller said wages growth as measured by average compensation per employee remained modest at 2.2% year on year, although average hourly earnings were up sharply.
“The wage numbers are a little difficult to interpret given COVID induced employee absences in the quarter,” he said.
For this reason, Miller said it was still somewhat of a puzzle why wages were not more visibly accelerating given tight labour markets.
“At this stage I’m putting it down to inertia in the official data as anecdotal evidence suggests wage growth is accelerating - as it should given tight labour markets. Nevertheless the puzzle should be acknowledged.”
He said the national accounts figures were not enough to forestall a further increase of 25 basis points in the policy rate when the RBA met again on 7 June.
“What they do mean is that unlike other developed country central banks, there is a limited need to consider ‘super-sized’ increments of 40 or 50bps."
AUTHOR
Liam Cormican
Recommended for you
Global asset manager Janus Henderson could be acquired after receiving a non-binding acquisition proposal jointly from a private investment firm and venture capital firm.
Investment manager Salter Brothers has partnered with private equity firm Kilara Capital to launch an Australian sustainable investment platform focusing on decarbonisation.
Fresh off launching three active ETFs to the Australian market, Avantis Investors is already planning to expand its range with two further products next year.
Ausbil is growing its active ETF range with an ESG product in collaboration with sister company Candriam.
