At 11:30am AEST the All Ordinaries Index (ASX: XAO) jumped 0.2% in just a few minutes as ASX All Ords investors favoured their buy buttons.
The modest but rapid spike higher on the ASX All Ords looks to have been spurred by the latest Australian wage growth data released by the Australian Bureau of Statistics (ABS).
Here's what's happening.
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ASX All Ords shares jump higher
ASX All Ords investors took some comfort from the 0.8% increase in wages the ABS just reported for the June quarter, which sees annual Aussie wages up 4.1%.
In the private sector, wages grew by 0.7% in the June quarter, down from the 0.9% increase in the March quarter.
"The June quarter 2024 private sector rise was the lowest rise for a June quarter since 2021 and the equal lowest rise for any quarter since December quarter 2021," Michelle Marquardt, ABS head of prices statistics said.
That could bode well for ASX All Ords shares as wage increases have been one of the factors keeping inflation from returning to the Reserve Bank of Australia's 2% to 3% target range. A range we need to hit before the central bank is likely to begin lowering interest rates.
Unfortunately, the same trend wasn't witnessed with public sector wages. These increased by 0.9% over the June quarter, up from a 0.6% increase in the March quarter.
"The stronger June quarterly rise for the public sector was largely due to the newly synchronised timing pattern of Commonwealth public sector agreement increases," Marquardt said.
The 4.2% increase in annual wage growth in the private sector compares to 3.9% growth reported this time last year. And the public sector annual wage growth of 3.9% compares to 3.1% growth this time last year.
Foolish takeaway
All told, I don't expect the latest wages data will be enough to encourage an interest rate cut from the RBA at the central bank's next meeting in September.
When the bank opted to keep interest rates on hold at 4.35% at its 6 August meeting, the board noted, "Wages growth appears to have peaked but is still above the level that can be sustained given trend productivity growth."
And as ASX All Ords investors will be accustomed to by now, there's a good deal of uncertainty ahead on the inflation and interest rate outlook.
According to the RBA:
There are uncertainties regarding the lags in the effect of monetary policy and how firms' pricing decisions and wages will respond to the slower growth in the economy at a time of excess demand, and while conditions in the labour market remain tight.
