At first glance, new figures would suggest that while businesses ramped up investment in their operations late in 2020, it didn’t extend to their workforce.
Australian Bureau of Statistics data shows the average annual wage is now just over $89,000.
But at an average weekly rate of $1712 as of November, this was down 0.1 per cent when compared to May, the first time there has been a fall during a six month period.
It followed an unusually large 3.3 per cent increase in the six months to May.
ABS head of labour statistics Bjorn Jarvis explained that May saw the greatest impact on the jobs market from the COVID-19 pandemic, resulting in a higher share of job losses in lower paid jobs and industries than those with higher earnings – raising the wage average.
“The fall in average earnings in November highlights the extent of recovery in low paid jobs, hours and earnings since May,” he said releasing the report on Thursday.
In the five years before COVID, the six-monthly increases in average weekly earnings were all between 0.4 per cent and 1.8 per cent.
The annual rate of the wage cost index – the preferred measures used by the Reserve Bank of Australia and Treasury in gauging wage growth that was released on Wednesday – remained at a record low 1.4 per cent.
Meanwhile, business investment unexpectedly jumped three per cent in the final three months of 2020, a positive result ahead of next week’s crucial economic growth figures.
Treasurer Josh Frydenberg told parliament this was the largest increase since March 2012, and a “another shot in the arm” for the Australian economy.
New private capital expenditure (capex) grew to $29.4 billion in the December quarter.
“The gain was largely driven by equipment and machinery, suggesting that the government’s tax incentives are already feeding through to planned expenditure,” BIS Oxford Economics chief economist Sarah Hunter said.
However, annual capex was still down 7.5 per cent compared to a year earlier.
Looking forward, businesses expect to invest $121.4 billion in the 2020/21 financial year, a 4.8 per cent increase on a previous estimate.
However, the first estimate for 2021/22 of $105.5 billion was down 3.4 per cent when compared to the first estimate for 2020/21.
“This result is unsurprising, given the impact of the pandemic on the economy, ongoing uncertainty, and for some sectors the very different demand environment they now face,” Dr Hunter said.
“It is likely to reinforce the RBA’s view that they will need to provide the economy with an extended period of monetary support, to try and kickstart capital expenditure.”
The RBA board will hold its monthly meeting on Tuesday where it is expected to keep the cash rate at a record 0.1 per cent.
The ABS figures show equipment, plant and machinery capex surged 5.7 per cent in the December quarter to $13.9 billion, while buildings and structures rose 0.7 per cent to 15.5 billion.
The data feeds into next week’s national accounts for the December quarter, which are expected to show an economic growth rate of around two per cent for the quarter, building on the 3.3 per cent rebound in the September quarter.
This followed the seven per cent collapse in the June quarter which marked Australia’s first recession since the early 1990s.