Wages growth softened as expected in the September quarter, offering more insight into why household consumption remains sluggish.
An ongoing lack of hours for a willing workforce again constrained pay packets, with total hourly rates excluding bonuses rising by a seasonally adjusted 0.5 per cent in the three months to September 30, compared to 0.6 per cent three months earlier.
Annual wages growth slowed to 2.2 per cent, according to figures from the Australian Bureau of Statistics, in line with a predicted dip from 2.3 per cent figure that had remained unchanged at the end of the previous four quarters.
Wednesday's figures were in line with the Reserve Bank's downgraded outlook through to December, and a sign the jobs market is too loose, according to NAB economist Kaixin Owyong.
"In our view, weak wage growth remains a disappointing indication of too much spare capacity," Ms Owyong said.
Australia's jobless rate edged lower to a seasonally adjusted 5.2 per cent in September but is still well short of the RBA's 4.5 per cent target it says is necessary to lift inflation to the target range.
BIS Oxford Economics chief economist Dr Sarah Hunter said the dismal September wages figures were further evidence that wages and jobs growth are inextricably linked and, given the state of the economy, not likely to improve anytime soon.
"With the headwinds facing the economy unlikely to abate in the near term we don't expect wages growth to accelerate markedly," Dr Hunter said.
BIS is forecasting a fourth reduction in the cash rate to 0.5 per cent in early 2020.
Callam Pickering, APAC economist at jobs site Indeed, agreed more stimulus was needed to fix the nation's wage problem.
"Whether it be through further rate cuts, unconventional monetary policy or, in an ideal world, fiscal stimulus," Mr Pickering said.
Tax offsets and three rate cuts since June have failed to flow through to the retail sector as Australians chose to save or pay down debt, with the Federal Government facing increasing pressure to do more to kick the economy along.
"Monetary and fiscal policy should be working in tandem to support the economy and reach full-employment ... that's currently not the case," Mr Pickering said.
Public sector annual wage growth of 2.5 per cent continues to outstrip private sector growth of 2.2 per cent, with wages for both sectors expanding by 0.5 per cent over the three-month period.
ABS chief economist Bruce Hockman said the largest contribution to wage growth over the quarter was jobs in the healthcare and social assistance industry.
Victoria recorded the highest annual growth of 2.8 per cent, while WA recorded the lowest of 1.6 per cent for the fifth consecutive quarter.
The central bank said in its quarterly statement on monetary policy that faster wages growth would be needed for inflation to be sustainably within its two to three per cent target range.
The RBA now tips wages growth will return to 2.3 per cent by the end of 2021
The Australian dollar dipped from 68.38 US cents to 68.31 after the Wage Price Index figures were released, but subsequently climbed as high as 68.58 after NZ's central bank kept the nation's interest rate on hold.