Workers can still expect decent wage growth but the record-breaking gains of the past quarter are unlikely to continue. 

An updated wage price index from the Australian Bureau of Statistics on Wednesday will provide a snapshot of base pay movements across the economy. 

Current up to December 2023, economists expect solid wage growth though not as strong as the record-breaking September numbers.

A 1.3 per cent increase in the three months to September was the highest quarterly growth rate on record, bringing the annual rate to a four per cent.

The strong rise was helped along by the industrial umpire’s minimum and award wage decisions, which kicked in on July 1.

The December report will likely reveal still-strong demand for workers, with employers bumping salaries higher to keep staff or attract new recruits.

Though St George economist Jarek Kowcza said the pace of wage growth was either at or past its peak, with forward-looking measures of private sector wages, such as advertised salaries, now stabilising. 

“While measures such as recruitment difficulty have been falling, which suggest easing wage pressures,” he said.

The bank’s economists expect the quarterly pace to slow to 0.9 per cent, which would take the annual rate to 4.1 per cent.

While nominal wages have been moving higher, inflation has been growing faster, eroding buying power.

But real wage growth can be expected earlier this year, based on Treasury forecasts, as inflation cools and pay gains stabilise. 

Higher interest rates have been working to slow the economy, bringing demand back into a better balance with supply and easing price pressures.

The outlook for economic growth remains lacklustre well into 2024 based on a collection of forward-looking data points collated by Westpac and Melbourne Institute.

The leading index has come off its lows of a year ago but has slipped back below trend in January.

Westpac senior economist Matthew Hassan said the index readings were consistent with the nation’s sluggish growth profile in the near term. 

“The Australian economy remains stuck in a below trend growth rut,” he said.

“While the leading index growth rate has improved on the weak reads seen through most of last year, it remains in negative territory overall implying the economy will continue to see sub-par growth well into 2024,” he said.

The bank is forecasting economic growth of 1.3 per cent at an annualised pace through to the first half of the year, down from the 2.5 per cent trend but up from the weak 0.8 per cent pace of growth in the back half of 2023.

This post was originally published on Michael West.