21stFebruary 2024
Wednesday
Key news releases are anticipated onWednesday from Australia and the US. Australia is set to unveil its Wage PriceIndex quarter-over-quarter, while the US will publish its FOMC Meeting Minutes.
AUD - Wage Price Index q/q
The Wage CostIndex, also known as the Labour Price Index, quantifies the change in laborcosts that businesses and the government incur, exclusive of bonuses. This datais disseminated quarterly, approximately 45 days following the end of thequarter. Serving as a precursor to consumer inflation, this index reflects theprinciple that increased labor expenses borne by businesses tend to betransferred to consumers through higher prices.
Australia's wageprice index surged by 4.0% year-on-year in Q3 2023, surpassing marketexpectations of 3.9%. This marked the highest reading since Q1 2009, withprivate sector wages growing at 4.2%, the highest since Q4 2008, and publicsector wages reaching their peak since Q2 2011 at 3.5%. Key contributors tothis growth included accommodation, healthcare, arts, manufacturing, and more.Quarterly wage prices also rose significantly by 1.3%, matching forecasts andindicating robust economic performance.
In the thirdquarter of 2023, Australia witnessed a 4.0% year-on-year increase in itsseasonally adjusted wage price index, surpassing the 3.6% rise observed in thesecond quarter and slightly exceeding the anticipated 3.9%. This marked thehighest level since the first quarter of 2009, with private sector wages havingclimbed by 4.2%, the highest since the fourth quarter of 2008, and publicsector wages reaching a peak not seen since the second quarter of 2011 at 3.5%.Breaking it down by industry, the largest gains were noted in accommodation(5.5%), healthcare and social assistance (4.9%), arts and recreation services(4.6%), along with consistent growth in manufacturing, transport, postal andwarehousing, retail trade, construction, administrative and support services,mining, and utilities, all having contributed significantly to the overallincrease. On a quarter-over-quarter basis, wages had advanced by 1.3%, anotable jump from a revised 0.9% in the previous quarter, representing the mostsignificant quarterly increase since at least the third quarter of 1997,aligning with projections.
TL;DR
Metric
Q3 2023 Data
Comparison/Remark
1 Year-on-Year Increase
4.0%
Highest since Q1 2009, surpassing market expectations of 3.9%
2 Private Sector Wage Growth
4.2%
Highest since Q4 2008
3 Public Sector Wage Growth
3.5%
Highest since Q2 2011
4 Industry Leaders
Various
Accommodation (5.5%), Healthcare (4.9%), Arts (4.6%), etc.
5 Quarterly Wage Price Increase
1.3%
Matches forecasts, significant jump from revised 0.9% in Q2
The projectedchange for the Wage Price Index q/q stands at 1%, down from theprevious figure of 1.3%.
The upcoming Wage Price Index q/q is scheduled to be released this Wednesdayat 1:30 AM GMT.
The lasttime, Australian Wage Price Index was announced on the 15th ofNovember, 2023. You may find the market reaction chart (AUDUSD M5)below:
USD - FOMC Meeting Minutes
A more hawkishoutcome than anticipated typically benefits the currency. The minutes of theFederal Open Market Committee (FOMC) meeting are released eight times a year,three weeks following the announcement of the Federal Funds Rate. These minutesoffer a comprehensive examination of the economic and financial circumstancesthat guided the FOMC's decision on setting interest rates.
In December2023, the Federal Reserve maintained the federal funds rate at 5.25%-5.5% forthe third consecutive meeting, matching expectations. However, it signaledpotential 75bps reductions in 2024. Policymakers noted a slowdown in economicgrowth and moderated yet strong job gains, with a consistently low unemploymentrate. Although inflation has declined over the past year, it remains high. TheFed's updated forecasts show an increase in GDP growth for the current year to2.6% (up from the previous 2.1%) but a slight decrease to 1.4% for 2024. PCEinflation estimates for 2023 and 2024 were revised downwards to 2.8% and 2.4%, respectively,with core PCE inflation projected at 3.2% for 2023 and 2.4% for 2024.Unemployment rate projections are stable at 3.8% for 2023 and 4.1% for the nextyear. The median federal funds rate projection for the end of 2024 dropped to4.6%, from September's projection of 5.1%.
TL;DR
Metric
Dec 2023 Data
Remarks/Projections
1 Federal Funds Rate
5.25%-5.5%
Maintained for the third consecutive meeting
2 Future Rate Adjustments
-
Signaled potential 75bps reductions in 2024
3 Economic Growth Slowdown
-
Noted slowdown in growth, moderated job gains, low unemployment
4 Inflation
-
High but declining over the past year
5 GDP Growth Forecast 2023
2.6%
Increased from previous 2.1%
6 GDP Growth Forecast 2024
1.4%
Slight decrease projected
7 PCE Inflation Estimate 2023
2.8%
Downwards revision
8 PCE Inflation Estimate 2024
2.4%
Downwards revision
9 Core PCE Inflation 2023
3.2%
-
10 Core PCE Inflation 2024
2.4%
-
11 Unemployment Rate 2023
3.8%
Stable projection
12 Unemployment Rate 2024
4.1%
-
13 Median Federal Funds Rate 2024
4.6%
Decreased from September's projection of 5.1%
The upcoming FOMCMeeting Minutes are scheduled for Wednesday at 7:00 PM GMT.
