Australia’s Q1 Wage Growth Accelerates on Public Sector Boost, But Private Sector Remains Tame

Economic

Summary:

Australian wages rose 0.9% in Q1 2025, driven primarily by public sector pay adjustments. Despite a tight labour market, subdued private-sector growth supports expectations...

Public Sector Drives Wage Growth Uptick in Early 2025

Australia's wage growth modestly accelerated in the March quarter, according to data released Wednesday by the Australian Bureau of Statistics. National wages rose 0.9% quarter-on-quarter—slightly above consensus forecasts of 0.8%—largely due to one-off wage increases in government-supported sectors such as aged care and childcare.

Annual wage growth ticked up to 3.4% from 3.2% in Q4 2024, with public sector pay rebounding sharply to 3.6% after a temporary dip in the previous quarter. In contrast, private sector wage growth remained flat at 3.3%, well below its 2024 peak of 4.2%, indicating that overall wage momentum remains uneven and policy-driven.

Private Sector Remains Subdued Despite Tight Labour Market

Despite continued strength in employment, wage gains in market-driven sectors remain weak. Industries such as retail, hospitality, and telecommunications posted only marginal increases—just 0.1% in the quarter—suggesting that structural wage pressures are limited and not yet aligned with broader labour market tightness.

Sean Langcake of Oxford Economics Australia noted that Q1’s wage strength was largely temporary and policy-induced, not the result of sustained economic demand. “The labour market is tight, but wage growth is relatively well-contained,” he observed, reinforcing expectations for a near-term rate cut by the Reserve Bank of Australia.

RBA Poised to Cut Rates Amid Inflation Relief

With inflation moderating and wage growth appearing manageable, markets remain confident the RBA will deliver a 25-basis-point rate cut at its May 20 policy meeting, bringing the cash rate down to 3.85%. Headline consumer price inflation held steady at 2.4% in Q1, while core inflation, measured by the trimmed mean, slowed to 2.9%—returning to the central bank’s target range of 2–3% for the first time since late 2021.

This inflation development gives the RBA greater flexibility. However, the bank remains cautious, particularly over concerns that other broader measures of labour costs may be heating up in the face of persistently weak productivity—a combination that could reverse inflation gains if left unchecked.

Jobs Data to Confirm Labour Market Resilience

All eyes now turn to April employment figures due Thursday, which are expected to show a net increase of 20,000 jobs, keeping the unemployment rate steady at 4.1%. Should this materialize, it would confirm ongoing strength in job creation, even as wage growth slows—offering the RBA a clearer path to ease monetary policy without risking overheating.

Australia’s Q1 wage data presents a mixed picture: temporary wage boosts in the public sector contrast with soft private-sector growth. With inflation easing and labour conditions stable, the RBA is widely expected to lower interest rates in May.

Still, the central bank will closely monitor wage dynamics and productivity trends in the months ahead, especially as the effects of U.S. trade policy and global economic volatility ripple through the domestic economy. For now, however, the data supports a cautious but proactive monetary policy pivot.

Source: Reuters

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Daily News

[Quick Facts]

1. Germany's economy to continue declining under impact of U.S. tariff.

2. U.S. and Ukraine sign supplementary documents for Minerals Agreement.

3. U.S. oil industry struggles.

4. Villeroy: ECB may cut rates again by summer.

5. U.S. Bipartisan Policy Center delays debt ceiling "X-Date" projection to August–October.

6. China adjusts tariff measures on U.S. imports to implement key consensus from high-level trade talks.

[News Details]

Germany's economy to continue declining under impact of U.S. tariff

A latest report released on May 13th by the German Institute for Economic Research (DIW) states that the German economy remains in recession, with economic output projected to decline by 0.2% this year. This follows contractions in both 2023 and 2024. The report highlights that Germany is severely affected by U.S. tariff policies and global uncertainties, with consumers remaining cautious about major purchases.

U.S. and Ukraine sign supplementary documents for Minerals Agreement

Ukraine and the U.S. have signed supplementary implementation documents to a long-anticipated minerals agreement, a critical demand by U.S. President Trump to sustain military aid to Ukraine. This step finalizes a major profit-sharing deal aimed at securing U.S. investment opportunities in Ukraine. Ukraine's Ministry of Economy announced in Kyiv on Tuesday that two documents outlining the operational mechanisms of a jointly established investment fund were signed. The fund, part of a previously approved mineral resources agreement by Ukraine's parliament, will be financed through tax shares from new mining licenses and other payments, while the U.S. may contribute via financial investments or military assistance.

U.S. oil industry struggles

The U.S. oil sector, battered by the dual blow of government tariffs and plummeting oil prices, is facing severe challenges, particularly for smaller producers. Reports indicate that indiscriminate U.S. tariffs have harmed domestic oil companies, which rely heavily on equipment imported from South Korea, Brazil, and Mexico. Industry consultancy data predicts a 40% year-on-year surge in steel pipe prices by Q4 2025. Kirk Edwards, former president of the Permian Basin Petroleum Association, criticized the industry's role as a "scapegoat" in U.S. tariff policies. Smaller independent producers, unlike giants like ExxonMobil and Chevron, are especially vulnerable, with recent weeks seeing $1.8 billion in spending cuts announced across the sector.

Villeroy: ECB may cut rates again by summer

ECB Governing Council member Villeroy stated that the central bank may lower borrowing costs again by summer, as trade tensions have not exacerbated inflation in the eurozone. In an interview with regional media EBRA on Tuesday, Villeroy remarked, "The Trump administration's protectionism will lead to a restart of inflation in the United States, but not in Europe, which will likely allow for another rate cut by the summer." The impact of Trump's tariffs on the eurozone's G20 economies will shape the ECB's rate path. Since June 2024, the ECB has cut rates seven times. While some officials support another move next month and remain open to further easing, others urge caution, citing potential inflation risks. The ECB's next monetary policy meetings are scheduled for June 6th and July 24th.

U.S. Bipartisan Policy Center delays debt ceiling "X-Date" projection to August–October

The U.S. Bipartisan Policy Center has revised its forecast for the federal government's debt ceiling deadline, now predicting that the so-called "X-date"—when the Treasury can no longer pay all bills—will fall between August and early October if Congress fails to suspend or raise the debt limit. The Washington-based think tank's previous estimate was two months earlier. The update reflects the Treasury's latest revenue and spending data. Shai Akabas, the center's vice president of economic policy, said there was a significant risk that tax season revenues could come in far below expectations, pushing the X-date as early as June during a briefing ahead of the release, hinting that the worst-case scenario did not materialize. The center noted that stronger-than-expected April tax revenues provided short-term support to the Treasury's cash balance, sharply reducing the threat of an X-date in June or July.

China adjusts tariff measures on U.S. imports to implement key consensus from high-level trade talks

The China-U.S. high-level meeting on economic and trade affairs was held in Geneva, Switzerland during, May 10th and 11th. On May 12th, the Joint Statement of the China-U.S. Economic and Trade Talks in Geneva was released, with both sides achieving positive consensus, including commitments to implement relevant measures by May 14th.

On May 12 (U.S. Eastern Time), the U.S. government issued an executive order to adjust its tariff measures on Chinese goods, effective from 00:01 a.m. ET on May 14th. In response and to implement the key consensus from the talks, China's Customs Tariff Commission announced adjustments to its retaliatory tariffs on U.S. imports. Effective from 12:01 p.m. Beijing time on May 14th, the additional tariff rate under Announcement No. 4 (2025) of the Customs Tariff Commission will be reduced from 34% to 10%, with a 24% portion suspended for 90 days. Additionally, the retaliatory measures outlined in Announcement No. 5 (2025) and Announcement No. 6 (2025) of the Customs Tariff Commission will be terminated.

The substantial mutual tariff reductions align with the expectations of producers and consumers in both nations, fostering stronger bilateral economic ties and benefiting the global economy. Chinese authorities also stated that other non-tariff countermeasures imposed after April 2nd in response to U.S. tariffs will be temporarily paused or revoked in the near future.

[Today's Focus]

UTC+8 15:05 Deputy Governor of the Bank of England Breeden speaks

UTC+8 17:15 Federal Reserve Governor Waller speaks

UTC+8 21:10 Federal Reserve Vice Chair Jefferson speaks

TBD OPEC releases Monthly Oil Market Report

Risk Warnings and Disclaimers

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Gerik

Forex

Stocks

Markets Tentatively Rally as Tariff Ceasefire Brings Short-Term Relief

Asian equities posted modest gains on Wednesday, buoyed by investor optimism following the 90-day pause in the U.S.-China trade war and encouraging U.S. inflation data. The MSCI Asia-Pacific ex-Japan index climbed 0.9% in early trade, while Hong Kong’s Hang Seng advanced on strong earnings from JD.com and rising expectations ahead of Tencent and Alibaba’s results.

While the immediate threat of escalating tariffs appears to have been neutralized, analysts remain cautious. Tony Sycamore of IG warned that while the “worst-case scenario has been priced out,” the market still lacks clarity on the framework for future trade negotiations.

U.S. Inflation Eases, but Fed Stays Cautious

Data released overnight revealed that U.S. consumer inflation came in lower than expected in April, alleviating some fears that tariff-related import costs would rapidly pass through to consumers. Despite this, the Federal Reserve has signaled that it will remain on hold for now, citing economic uncertainty stemming from President Trump’s unpredictable tariff policy.

The Fed’s reluctance to cut rates in the near term has tempered some of the market's initial enthusiasm. Although traders anticipate inflation could rise in coming months as tariff impacts materialize, the softer CPI reading buys time for policymakers to assess longer-term trends.

Global Sentiment Recovers, But Risks Linger

Market sentiment has recovered from April’s volatility, helped not only by the U.S.-China truce but also by trade progress between Washington and other partners such as the UK. President Trump has hinted at ongoing trade negotiations with India, Japan, and South Korea, suggesting more deals could be on the horizon.

However, European and U.S. equity futures point to modest pullbacks, indicating that investors remain wary of overcommitting before more clarity emerges from trade and macroeconomic data.

Dollar Weakens Amid Global De-risking

The U.S. dollar remained under pressure as investor appetite for U.S. assets continued to cool. The dollar index was flat after a 0.8% drop the previous day, with the greenback falling 0.2% against the yen to 147.13 and holding steady at $1.1186 against the euro. According to Bank of America’s Global Fund Manager Survey, asset managers in May held their largest underweight position in the U.S. dollar in 19 years, reflecting sustained concern over policy volatility.

Treasury yields also fell, with the benchmark 10-year note dropping 2 basis points to 4.4768%, as investors sought safety amid geopolitical and policy uncertainty.

Energy and Gold Slightly Lower, Retail Data and Geopolitics in Focus

Crude oil prices eased slightly, with U.S. West Texas Intermediate (WTI) dipping 0.3% to $63.48 per barrel. Spot gold also fell marginally to $3,244.79 per ounce as market calm reduced demand for safe-haven assets.

Investors now turn their attention to U.S. retail sales data due Thursday, which will offer further insight into consumer resilience amid inflation and trade disruptions. Additionally, geopolitical focus will shift to scheduled Ukraine–Russia talks in Istanbul, which hold implications for global stability and energy markets.

Relief Rallies Meet Reality Check

While the temporary tariff truce and subdued U.S. inflation have improved short-term sentiment, markets remain wary. Investors are recalibrating expectations around Fed policy and trade normalization, with the dollar's weakness underscoring the global shift away from U.S. assets.

Until more concrete developments emerge—particularly on the trade and geopolitical fronts—markets are likely to remain sensitive, balancing cautious optimism with a close watch on policy risks.

Source: Reuters

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Diana Wallace

Economic

Political

Key Points:

● Trump to announce new trade agreements affecting market dynamics.

● 20-25 trade deals currently under negotiation.

● Potential positive impact on U.S. macroeconomic stability.

Donald Trump, the President of the United States, is expected to announce the next trade agreement upon his return from the Middle East, as stated by National Economic Council Director Larry Kudlow.

The upcoming announcement holds significance in potentially reshaping global trade balances and impacting market sentiments wide-reachingly.

Trump's Trade Strategy: 20-25 Deals in Negotiation

President Trump is poised to reveal a new trade agreement following his Middle East trip, according to Larry Kudlow, who confirmed that about 20-25 agreements are currently on the negotiation table.

The announcement is likely to affect tariffs and access for U.S. enterprises, which could stimulate economic growth and recalibrate trade deficits, focusing on boosting U.S. exports.

"Following Trump's return to the U.S., there will be an announcement regarding the next trade agreement, signaling about 20–25 agreements currently under negotiation."

Bitcoin Sees Uplift Amid Trade Agreement Speculations

Did you know? A historical 90-day tariff reduction with China under Trump's administration previously sparked brief relief rallies in financial and digital asset markets, demonstrating the power of trade deals on global economic sentiment.

Bitcoin (BTC) is currently valued at $104,229.24, holding a market cap of $2.07 trillion as of recent data from CoinMarketCap. Its price has risen by 1.26% in the past 24 hours, showcasing positive movements over the past month, with a 24.79% rise.

Bitcoin(BTC), daily chart, screenshot on CoinMarketCap at 23:49 UTC on May 13, 2025.

Expert analysis suggests that ongoing trade agreements might lead to increased global risk appetite. This could influence macroeconomic stability positively, although direct effects on cryptocurrencies remain speculative. An open Chinese market could encourage further investment flows into both traditional and digital markets.

Source: CryptoSlate

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Golden Gleam

Asia-Pacific markets traded mostly higher Wednesday after key Wall Street benchmarks rose on easing U.S.-China trade tensions.

Japan's benchmark Nikkei 225 climbed 0.37% at the open, extending gains after four consecutive positive sessions. South Korea's Kospi rose 0.78%.

Australia's benchmark S&P/ASX 200 traded flat.

Futures for Hong Kong's Hang Seng Index stood at 23,288, higher than its last close of 23,108.27.

Wall Street rebounded after the U.S. and China reached a temporary truce on tariffs earlier this week. The development led to stocks surging with the Dow gaining more than 1,000 points Monday.

At current levels, however, Julius Baer strategists remain cautious, adding that the bank "does not share the prevailing optimism" regarding a quick resolution of the trade conflict.

"Even if new deals are announced, they are likely to involve complex conditions and protracted implementation timelines, making a full rollback of tariffs to pre-conflict levels unlikely," the bank said in a Tuesday note.

Investors will be keeping an eye on Asian chip stocks after shares of Nvidia jumped following CEO Jensen Huang's remarks that the company will sell more than 18,000 of its latest artificial intelligence chips to Saudi firm Humain, a new AI startup owned by the country's Public Investment Fund.

U.S. stock futures were little changed as Wall Street looks to extend a strong start to the week. Futures tied to the S&P 500 were flat, as were Nasdaq 100 futures. Dow Jones Industrial Average futures added 30 points, or less than 0.1%.

Overnight stateside, the three major averages closed mixed. The S&P 500 rose, clawing back into positive territory for the year as investors extended the sharp gains seen in the previous session. The broad market index gained 0.72% to close at 5,886.55, while the Nasdaq Composite climbed 1.61% to end at 19,010.08.

The Dow Jones Industrial Average lagged, losing 269.67 points, or 0.64%, as a nearly 18% drop in shares of UnitedHealth pressured the benchmark.

Source: CNBC

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Kevin Morgan

A record number of people left New Zealand in the year through March, reducing the net gain through immigration to the lowest in more than two years.

Some 123,256 people departed the country in the period, including 70,000 New Zealand citizens, Statistics New Zealand said Wednesday in Wellington. There were 149,607 migrant arrivals, resulting in a net increase of 26,351 people, the lowest annual reading since December 2022.

Net immigration has been steadily declining from a peak of more than 135,000 in late 2023 as the economy slows, curbing hiring and wage inflation. Many citizens have opted to look overseas — particularly to Australia — for better paying jobs while foreign workers are increasingly reluctant to head to the country when work is scarce.

Migrant arrivals were 28% lower than in the year through March 2024.

About 59% of all citizen departures were to Australia, the statistics agency said, citing data for the year ended September that is the most recent available.

Revisions showed a net immigration gain of 84,230 in the three months through February, down from the 96,570 previously estimated. The agency said data from the past four months is subject to revision because it is not known if travelers are migrants or tourists.

Source: Bloomberg Europe

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FastBull Featured

U.S. consumer prices rebounded moderately in April, but inflation is likely to pick up in the months as tariffs boost the cost of imported goods.

The consumer price index CPI increased 0.2% last month after dipping 0.1% in March, which was the first decline since May 2020, the Labor Department said on Tuesday. Economists polled by Reuters had forecast the CPI would rise 0.3%. Year on year, the CPI climbed 2.3%, vs a 2.4% rise in the 12 months through March.

Excluding the volatile food and energy components, the CPI rose 0.2% after gaining 0.1% in March. The so-called core CPI inflation increased 2.8% on a year-on-year basis in April after rising 2.8% in March.

The data likely only captures tariffs imposed before President Donald Trump's April 2 "Liberation Day" announcement.

MARKET REACTION:

STOCKS: U.S. stock index futuresturned 0.09% higher, pointing to a steady open on Wall Street

BONDS: The 10-year U.S. Treasury yield (US10YT=TWEB) slipped to 4.4531% while the two-year yield (US2YT=TWEB) fell to 3.973%

FOREX: The dollar indexextended slightly lower and was off 0.3%; the euroextended 0.44% higher

COMMENTS:

PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK

“The numbers were a little higher than I was looking for, but you know, year-to-year 2.3%, that's not bad.”

“The report basically indicates that the Fed needs to be very cautious and that the stand that they have taken is probably the right course, for now.”

“Inflation remains sticky, and the feds need to be vigilant.”

“The Fed has embarked on what seems to be the right course and unless there's any real movements in terms of trade war ending by June, it looks like a June rate cut remains in question.”

“I would say (tariffs) will show up in the data sometime in the latter part of June, July, into August. So, we're looking for those numbers to be ugly.”

BRIAN JACOBSEN, CHIEF ECONOMIST, ANNEX WEALTH MANAGEMENT, MENOMONEE FALLS, WISCONSIN

"While the headline number for inflation was better than expected, there are indicators that tariffs have already pushed prices higher. Audio equipment and furniture had unseasonably large increases in prices. Turning down the temperature of tariffs is good as the price effects would start seeping into the consumer basket pretty quickly. The trade reset with China might mean the Fed can go back to business as usual and gradually resume cutting rates later this year.

JORDAN RIZZUTO, CHIEF INVESTMENT OFFICER, GAMMAROAD CAPITAL PARTNERS, NEW YORK

"Looking at the immediate market reaction, this does not seem to be a game changer in any major way. In terms of inflation expectations and monetary policy, we're very much in the same place that we were before the report came out. This wouldn’t materially shift the outlook that Chairman Powell shared with us a few days ago with regards to monetary policy.

"We expect the Fed to continue to be in a wait-and-see mode until we see some further materialization of pricing pressures that may come from the new trade policies that are that are being implemented.

"We've got a few factors at play. What comes at the conclusion of that 90-day window? There's still quite a bit of uncertainty there and the choppiness in how the short end of the interest rate curve is being traded in the futures market is reflecting that."

"It's good news. It confirms the Fed could cut two times this year, and I think that's good for stocks. I think investors have grown frustrated that inflation has proved sticky. There's been a fear that tariffs are going to push inflation higher, and they may still, but today's data at least gives investors a sense of relief that inflation is still moving in the right direction… A read like today could give investors hope that the Fed may not cut two times this year, they may cut three times this year."