Aust wages growth still behaving

Despite unemployment at a 33 year low Australian wages growth has been fairly well behaved. Today the ABS reported that wages grew 1.0% in the first quarter of calendar 2007 coming in well under the 1.3% consensus estimate and up 4.1% on a year earlier, even after factoring in the minimum wage rises awarded in March. The $AUD fell and bonds rallied as lingering fears of an interest rate rise were alleviated in the short term.

Also of note today was the Westpac consumer confidence survey showing consumer confidence at it's highest level in 32 years. Evidence of happier consumers showed up in the March retail sales numbers and with the recently announced tax cuts and positive interest rate outlook we can expect more positive readings over the next few months. The real test will be to see this new found optimism showing up in the currently lack-lustre housing market. All things considered I must concur with recent observations that the Australian economy is currently in a sweet spot.