FEAR & GREED | Business News The Week Ahead | 19 May 2025
May 18, 2025
Economist Stephen Koukoulas, known as The Kook, dives into this week's critical Reserve Bank board meeting. He discusses recent unexpected wage growth in the public sector and its impact on the economy. Koukoulas also explores the connection between wage increases and productivity, especially in female-dominated industries. With 89,000 new jobs reported, the conversation shifts to the potential for an interest rate cut as the economic landscape evolves. Plus, he shares intriguing insights on how messaging during press conferences can influence market perceptions.
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Balanced Wage Growth Insight
- The recent wage price index was in line with expectations, with a slight rise due to public sector award increases.
- Private sector wages, which influence inflation, remain softer, indicating a balanced labor market condition.
Wage Growth Needs Productivity
- Sustaining wage rises requires productivity improvements to avoid inflationary pressure.
- The RBA targets 3.5% wage growth: 2.5% inflation plus 1% productivity growth, but productivity has been stagnant lately.
Jobs Surge but Unemployment Stable
- Despite a surge in jobs, the unemployment rate stayed steady at 4.1%, showing labor market resilience.
- Aggregate hours worked fell slightly, suggesting less overtime or reduced average working hours per employee.