<p>The final apartments in the most recently completed new development in Balwyn present some of the largest and most exclusive ever delivered in one of Melbourne’s most established and character-rich neighbourhoods.</p>

<p>Boutique developer&nbsp;<a href="https://www.apartments.com.au/developers/wulff-projects">Wulff Projects</a>,&nbsp;alongside partner <a href="https://www.apartments.com.au/developers/pga-group">PGA Group</a>, has just finished <a href="https://www.apartments.com.au/buildings/threadneedle-balwyn-1-5-threadneedle-street-balwyn-vic-3103">Threadneedle</a>, 17 home-sized residences designed completely for the owner-occupier.</p>

<p>Named after its location on Threadneedle Street, the new project has been shaped by the heritage fabric of Balwyn. It offers two low-rise buildings of eight and nine apartments respectively, designed to emulate traditional standalone homes.&nbsp;</p>

<p>[smartcode_project:default project_id=27816 project_image_fid=355582]</p>

<p>John Scaramuzzino, Director at <a href="https://www.apartments.com.au/architects/bruce-henderson-architects">Bruce Henderson Architects</a>, explains the design intention.</p>

<p>“Given the quiet residential character of the street with many homes dating back to the 1930s and 1940s, we approached Threadneedle wanting to appear less as a collection of apartments and more as a traditional residence. This led to creating not one but two buildings that could “breathe” with larger garden-based apartments functioning more like small homes.”</p>

<p>[smartcode_project:default project_id=27816 project_image_fid=355605]</p>

<p>The north-facing residences are nestled among extensive landscaped gardens by Ben Scott Garden Design, with over one-third of the site dedicated to greenery. The resulting setting is one of calm seclusion, where architecture and landscape work in tandem to offer immediate liveability.</p>

<p>With construction now complete, the final apartments include a top-floor, single-level penthouse residence priced from $2.8 million. This home offers three bedrooms, a dedicated study, two bathrooms plus powder room, and three car spaces with an oversized storage room.&nbsp;</p>

<p>Interiors prioritise spatial comfort and natural light, with three-metre-high ceilings, oversized internal doors and a full-width terrace oriented to the north, east and west.&nbsp;</p>

<p>[smartcode_project:default project_id=27816 project_image_fid=355604]</p>

<p>Floor-to-ceiling double-glazed windows ensure thermal performance across seasons, supported by automated external blinds, zoned heating and cooling, and a fireplace for added ambiance.</p>

<p>Each apartment has been individually designed to maximise privacy and garden outlooks. Kitchens combine refined finishes with practical considerations: stone benchtops, butler’s pantry, full-height joinery and concealed rangehoods.&nbsp;</p>

<p>The inclusion of dedicated home offices responds to contemporary living patterns, while bathrooms feature sculptural bathtubs and brushed nickel fixtures.&nbsp;</p>

<p>[smartcode_project:default project_id=27816 project_image_fid=355590]</p>

<p>Threadneedle also integrates best-practice sustainability measures, achieving a 7 Star average NatHERS rating. Initiatives include solar PV systems, rainwater harvesting for toilet flushing and irrigation, and high-performing building insulation. These elements enhance daily comfort while reducing ongoing maintenance and energy demand.</p>

<p>"We believe Threadneedle sets a new standard of design excellence and building quality for Balwyn,"&nbsp;Scaramuzzino added.</p>

<p>"It’s an architectural response we’re particularly proud of, and one we’re sure residents will be equally proud to call home."</p>

<p>[smartcode_project_cta:default project_id=27816]</p>


Staff Writer

Final homes remaining as Threadneedle, Balwyn completes construction

Joel Robinson

Sydney's top 15 new apartments developments set to launch in 2026

<p>Developer-builder <a href="https://www.apartments.com.au/developers/dasco-australia">DASCO</a> has pushed beyond the now-standard inclusions of rooftop pools and landscaped podiums at its recently launched new Epping project, Senso.</p>

<p>It has laid out over 4,000 sqm of resident-only amenity in a move designed to compete directly with low-density housing on livability, not just density. The result is a development that supports genuine daily use through purposeful spaces distributed across its five-building, 479-apartment precinct.</p>

<p>[smartcode_project:default project_id=134954 project_image_fid=4396]</p>

<p>Two rooftop pools form the anchor of Senso. One is a 27-metre lap pool adjoining a heated spa, designed for everyday fitness rather than just summer leisure. The second sits on a lower podium, allowing different buildings to share in vertical access and reducing crowding during peak times.</p>

<p>It is the secondary spaces that start to distinguish Senso from other large-scale suburban projects. A rooftop cinema is integrated into a landscaped terrace, offering open-air screenings with natural ventilation and passive cooling.&nbsp;</p>

<p>The inclusion of a “sensory walk”, an elevated boardwalk that threads through the site, suggests a rare investment in non-commercial, non-essential amenity: space for quiet movement that doesn’t double as access or traffic circulation.</p>

<p>[smartcode_project:default project_id=134954 project_image_fid=4402]</p>

<p>The gym and wellness centre, often relegated to a small ground-floor room in many builds, takes on more substance here. Residents have access to a fully equipped gym, as well as outdoor yoga areas and meditative zones that integrate greenery and natural light.&nbsp;</p>

<p>The Club Lounge is similarly designed to support multiple use cases, with a private dining terrace, kitchenette, workspace, and lockable wine storage. These aren’t superficial additions; their scale and spatial allocation indicate serious intent for frequent resident use.</p>

<p>[smartcode_project:default project_id=134954 project_image_fid=4391]</p>

<p>Importantly, Senso’s amenities are embedded within a site that spans more than 10,000 sqm, allowing for better separation between spaces and reduced noise spillover, a critical but often overlooked factor in high-density developments. This spatial generosity also enables multiple alfresco kitchens and communal terraces without compromising individual privacy or usable space.</p>

<p>While many developments make claims about lifestyle, few back it with this level of built infrastructure. Senso’s mix of dedicated fitness, wellness, social and passive green spaces suggests a conscious response to the post-pandemic shift in housing expectations, especially among owner-occupiers.&nbsp;</p>

<p>DASCO is one of several leading developers who have taken out Resilience Insurance's Latent Defects Insurance policy, providing buyers with a 10-year structural and waterproofing warranty, and giving them the ultimate peace of mind.</p>

<p>Senso is scheduled for completion in late 2028.</p>

<p>[smartcode_project_cta:default project_id=134954]</p>


The outdoor amenities elevating life at Senso, Epping

<p>Following the proposal by the Minns Labor Government to rezone Parramatta Road to create up to 8,000 new homes, prominent developer Ceerose has gone to the NSW Gov to increase the density of its new mixed-use residential building in Leichhardt.</p>

<p><a href="https://www.apartments.com.au/builders/ceerose">Ceerose</a>, founded by Edward Doueihi nearly three decades ago, has filed plans for 154 apartments above ground-floor retail at 307-315 Parramatta Road, a key corner site near Norton Street, the main high street strip in Leichhardt.</p>

<p>It's an upsize from the previously approved scheme of 63 apartments across a seven-storey building.</p>

<p><img alt="Ceerose" data-entity-type="file" data-entity-uuid="ba1ae75b-5f08-43fb-b8d5-3de6d9f6ef71" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-04%20at%2010.31.39%E2%80%AFAM.png?VersionId=yA3hBBLPH4ev7MsAE0_hieXeqiFqBUb7" /></p>

<p>The project is being advanced through the State Significant Development (SSD) pathway, with concurrent rezoning sought to facilitate the proposal. The 10-storey development would rise over a four-level basement and deliver two retail tenancies, one a larger-format offering and the other a smaller “hole in the wall” space, addressing the Parramatta Road frontage. 21 of the apartments are dedicated as affordable housing.</p>

<p>According to the Urban Design Report by Architecture AND, the scheme includes a podium and tower configuration, with a fine-grain, two-storey parapet street wall that references the traditional shopfront rhythm along the corridor. “An elegant tower form is proposed, combined with a characterful two storey frontage... articulating it as two related buildings, providing consistency with the rhythm and grain of Parramatta Road,” the report notes.</p>

<p>The residential component is split across two slender towers set back from the street edge, a design move aimed at preserving solar access and reducing perceived bulk. This massing strategy also seeks to improve residential amenity by focusing scale toward the quieter northern interface, away from Parramatta Road’s noise and pollution.</p>

<p><img alt="Ceerose" data-entity-type="file" data-entity-uuid="347f2f8f-5d36-4388-b40a-2e77380b9c19" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-04%20at%2010.31.02%E2%80%AFAM.png?VersionId=xvyUE2ujT1lzivXTo.mHBJFF4SmfgLtz" /></p>

<p>Architecture AND has worked with Ceerose on previous Inner West projects, and cites a deep familiarity with the local character. Their design draws heavily on context, heritage, and sunlight access considerations, and engages with the Inner West Council’s “Our Fairer Future” strategic planning framework.</p>

<p>The site spans 2,712 sqm and is located near key intersections with Catherine Street, Hay Street, and Redmond Street. It adjoins a public carpark to the north and is within walking distance of Stanmore and Petersham stations. It is also flagged in state and local planning strategies, including the Parramatta Road Corridor Urban Transformation Strategy, as a suitable candidate for increased density.</p>

<p>Ceerose recently completed The Alex Collective on McEvoy Street in Alexandria, Abbie's Lane in Annandale, and the award-winning Munro House in Elizabeth Bay.</p>

<p>The Parramatta Road corridor is coming to life with the proposed rezoning which is serviced by a significant number of bus, light rail and train routes.</p>

<p>Deicorp is progressing with its $1.8 billion <a href="https://www.apartments.com.au/new-apartments/kings-bay-village-five-dock-53-75-queens-road-five-dock-nsw-2046">Kings Bay Village</a> precinct on Parramatta Road in Five Dock, as is <a href="https://www.apartments.com.au/news/nsw/toga-to-push-on-with-five-dock-mixed-use-masterplan">TOGA further down the street</a>. Those two projects alone will bring nearly 2,000 new homes to Parramatta Road.</p>


First look: Ceerose plots mixed-use Leichhardt development on Parramatta Road

<p>North Sydney's landmark 'SBS Building' on Alfred Street is set to be demolished to make way for a new mixed-use residential tower in the booming North Sydney.</p>

<p>Commercial property group FiveX is behind the plans for a <a href="https://www.apartments.com.au/new-apartments/275-alfred-street-north-north-sydney-nsw-2060">39-storey tower</a>, the latest project to advance under the NSW Government’s Housing Delivery Authority pathway.</p>

<p>They are proposing 184 apartments above retail spaces, which will replace the existing 20-storey commercial building. FiveX was set up more than five decades ago by Joshua and Marko Berger. It is currently led by Joshua's son Lesli.&nbsp;</p>

<p><img alt="First look: Fivex plans 39-storey residential tower at 275 Alfred Street, North Sydney" data-entity-type="file" data-entity-uuid="2efa0980-53fa-4cca-9f9e-9c3c845d4746" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Article%20Feature%20Image%20%28Grid%29%20%281%29_0.png?VersionId=y_YyPMq3NQLfYRs84pP4os9UgWiMLp75" /></p>

<p>According to the Architectural Design Report by <a href="https://www.apartments.com.au/architects/fjc-studio">FJC Studio</a>, the slender tower form has been deliberately designed to respect the site's transitional setting at the southern gateway to the North Sydney CBD, where high-rise towers give way to lower-scale residential precincts.</p>

<p>"The slender tower form and articulated podium establish a respectful relationship with nearby heritage and low rise buildings, including the Whaling Road Heritage Conservation Area,” the architecture firm noted, adding that the tower “completes a missing link in the urban fabric” while enhancing the Alfred Street streetscape.</p>

<p>The proposed building will include a mix of one-, two- and three-bedroom apartments, with 15 percent of the gross residential floor area allocated as affordable housing. There is an agreement already in place that those apartments will be managed by Evolve Housing.</p>

<p>The project aligns with broader state housing objectives, including the National Housing Accord target of delivering 1.2 million new homes by 2029. The Scoping Report filed with the State Significant Development Application (SSDA) suggests the site "presents no impediments to rapid delivery,” with construction able to commence within 12 months of receiving consent.</p>

<p>North Sydney has been one of the most popular suburbs in Sydney for new and off the plan apartment development, but hasn't had the supply to keep up with demand, until recently.</p>

<p>AURA by Aqualand was, for a long time, the only off the plan apartment building on the market. That completed last year, and has sold the majority of its 386 luxury apartments. Recently ALAND launched <a href="https://www.apartments.com.au/new-apartments/the-walden-173-179-walker-street-north-sydney-nsw-2060">The Walden</a> on the same street, selling over $100 million within just a few hours of its launch, while developer CASA also launched&nbsp;<a href="https://www.apartments.com.au/new-apartments/the-mclaren-north-sydney-45-mclaren-street-north-sydney-nsw-2060">The McLaren</a>&nbsp;in the same precinct.</p>


First look: Fivex plans 39-storey residential tower in booming North Sydney

Wage Growth

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<div>There's an old tradition when it comes to job numbers that goes something like this: if the numbers are crap we're doomed; and if the numbers are good then they must be wrong.</div>
<div> </div>
<div>The technical term for this is <em>confirmation bias</em>.</div>
<div> </div>
<div>As ever this month's <a href="http://petewargent.blogspot.com/2018/09/enormous-jobs-growth-in-nsw" target="_blank">booming jobs numbers</a> were treated with anything from scepticism to outright derision.</div>
<div> </div>
<div>And yet the solid results have kept on coming, especially in the two most populous states. </div>
<div> </div>
<div>There's another bias that tends to impact people: when things have been bad, they expect bad things to continue.</div>
<div> </div>
<div>And quite understandably we're seeing a lot of this in relation to weak private sector wages growth.</div>
<div> </div>
<div>After all, soft nominal wage price growth has been around since 2015, so it's becoming quite hard to imagine that pay packets could soon begin to swell again. </div>
<div> </div>
<div>But take note, because in some states this may be about to change...</div>
<div> </div>
<div><strong><span style="text-decoration: underline;">Private sector wages to lift</span></strong></div>
<div> </div>
<div>Although it never seems to get reported anywhere, I've shown <a href="http://petewargent.blogspot.com/2018/07/statistical-buggery" target="_blank">several times before</a> that while the underutilisation <strong><em>rate </em></strong>is high, in volume measures terms things have been very steadily improving for the past few years. </div>
<div> </div>
<div><span>That is to say, lots of people still want more hours of work, but the numbers of extra hours wanted has been declining over the past four years.</span></div>
<div><span> </span></div>
<div class="separator"><a href="https://2.bp.blogspot.com/-1YQRG8zAXOg/W51tO98q9RI/AAAAAAAAr6M/vjMLPeIRSGQWCmjRozgEk1kmQtCf41EOACLcBGAs/s1600/UU.jpg"><img src="https://2.bp.blogspot.com/-1YQRG8zAXOg/W51tO98q9RI/AAAAAAAAr6M/vjMLPeIRSGQWCmjRozgEk1kmQtCf41EOACLcBGAs/s640/UU.jpg" width="640" height="376" data-original-height="799" data-original-width="1355"></a></div>
<div> </div>
<div>Where is wages growth going to show up first?</div>
<div>
<br>The answer is Victoria, with construction firing up across the state <a href="http://petewargent.blogspot.com/2018/07/state-of-victoria-getting-under" target="_blank">on an unprecedented scale</a>.</div>
<div> </div>
<div class="separator"><a href="https://1.bp.blogspot.com/-UwNPSL_X5r4/W51uLZYH0sI/AAAAAAAAr6U/DSEyyKW3gQ0gBKzC7K9tuLxpeXKi0KoPACLcBGAs/s1600/VIC.jpg"><img src="https://1.bp.blogspot.com/-UwNPSL_X5r4/W51uLZYH0sI/AAAAAAAAr6U/DSEyyKW3gQ0gBKzC7K9tuLxpeXKi0KoPACLcBGAs/s640/VIC.jpg" width="640" height="364" data-original-height="799" data-original-width="1402"></a></div>
<div> </div>
<div><span>And sure enough this week's figures showed that the underutilisation rate in Victoria has dived from a seasonally adjusted peak of 16.1 per cent to 12.5 per cent, with the trend pointing straight down. </span></div>
<div><span> </span></div>
<div>If you listen to the brilliant Business Insider <em>Devils &amp; Details</em> podcasts you'd be well across the following point thanks to the awesome deep-dive analysis of Justin Smirk at Westpac.</div>
<div><span> </span></div>
<div><span>Even allowing for potentially rogue seasonally adjusted figures, the trend improvement points to private sector wages growth in Victoria returning to 3<span>½</span> per cent in due course. </span></div>
<div>
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</div>
<div>The recent improvement in New South Wales has been a little shallower, but the trend is quite similar, and in fact the unemployment rate in the state is now down to just 4.7 per cent in seasonally adjusted terms. </div>
<p> </p>
<div>Here's the paradox of immigration: of course, it adds to the supply of labour, but it also creates demand in the economy. </div>
<div> </div>
<div>Indeed, as Smirk has demonstrated previously, the underutilisation in the labour force has not been behaving in a way consistent with it being solely caused by immigration. </div>
<div> </div>
<div>And these numbers confirm that he's right, with the tightening labour markets being those where most immigrants are heading to.</div>
<div> </div>
<div>The numbers in Victoria and New South Wales keep on improving.<br><br>This certainly won't stop the calls for lower immigration, of course, or indeed the predictions of a recession, but these numbers suggest that wages growth should pick up from here. </div>
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pwargent-M4siyDbqQY

Wages growth in NSW and Victoria is coming: Pete Wargent

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<p>Global recruitment firm Robert Walters has released its salary expectations for Australian professionals in 2020, with roles in certain sectors set to experience wage growth.</p>
<p>The Robert Walters Salary Survey for 2020 predicts NSW as the state to see the greatest salary increases with property, infrastructure, and the energy sectors dominating the wage growth leaderboard.</p>
<p>“With Australia committed to long-term nation-building programs throughout 2020, it is not surprising that wages will continue to fluctuate and stimulate demand for specialist roles in the property, infrastructure and energy sectors,” said James Nicholson, Robert Walters Managing Director ANZ.</p>
<p>The top five wage growth roles are a mix of permanent and contract roles in NSW within the property, infrastructure and energy sectors.”</p>
<p>The renewables sector will witness strong wage growth, albeit from a small labour pool. There are currently 103 projects that are in construction (or due to start) in Australia, which are expected to deliver over $27 billion in investment and create over 16,000 jobs.</p>
<p>However, “While the emerging renewables sector is showing signs of promise, and the creation of some new jobs, uncertainty may linger until the Australian government articulates a more comprehensive energy policy,” said Mr Nicholson.</p>
<p>Technology and transformation continues to dominate the larger Australian wage narrative with roles such as Business Analyst positions in Victoria and Developer roles in South Australia to see 18-20% annual growth respectively, while broader sector conditions will see some roles in oversupply, confirming a two-speed market environment.</p>
<p>“Technology transformations are continuing unabated across every industry in Australia. As a result, 2020 will see employers vying for professionals with expertise in development, UX, data management and cyber security. Concerns about widespread unemployment due to automation and artificial intelligence have, so far, proved unfounded.” Mr Nicholson said.</p>
<p>Rounding out the top three industries for wage growth nationally is the financial services sector, which remains under enormous pressure from regulators, legislators, government, media and their customers.</p>
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wdavis-8cCN98p7xp

Property industry predicted to lead 2020 in wage growth 

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<p>Australia's seasonally adjusted wage growth has increased 2.3 percent over the year, according to The Australian Wage Price Index (WPI) released by the ABS for the September quarter. </p>
<p>Many were predicting a wage growth in the early two percent region, with a quarterly increase of around 0.6 percent.</p>
<p>ABS chief economist Bruce Hockman said seasonally adjusted, private sector wages rose 2.1 per cent and public sector wages grew 2.5 per cent, through the year to September quarter 2018.</p>
<p>"There was a higher rate of wage growth recorded across the majority of industries in comparison to this time last year, reflecting the influence of improved labour market conditions," Hockman said.</p>
<p>"Annual wage growth at the Australia level was 2.3%, the highest growth rate since September quarter 2015."</p>
<p>Economist Stephen Koukoulas tweeted his disappointment after the ABS release, suggesting there was no material pick up.</p>
<p>"Yet another really soggy wages result, unfortunately," he wrote.</p>
<p>"With no minimum wage increase in next three quarters it looks like annual wages growth will revert to the 2 to 2.25 percent range."</p>
<p>ABC business reporter David Taylor was quick to highlight the lack of real growth, suggesting that the ABS are talking up the latest annual wage rise.</p>
<p>He tweeted that at 2.3 percent, the growth rate is now clearly ahead of inflation at 1.9 percent, so "most Aussie's are not going backwards," but added it is "still damn hard to get a pay rise in the private sector."</p>
<p>Annual<strong> </strong>growth to the September quarter ranged from 1.8 percent for the mining and retail trade industries to 2.8 per cent for the health care and social assistance industry.</p>
<p>Western Australia recorded the lowest through the year wage growth of 1.8 per cent while Tasmania recorded the highest of 2.6 per cent. </p>
<p>The Reserve Bank will have had all eyes on the announcement, with a wage growth rise a key driver in speeding up GDP growth, which they've ambitiously forecast to hit 3.5 percent by December.</p>
<p>RBA assistant governor Guy Debelle said the RBA are anticipating wage growth will continue to pick up gradually as the unemployment rate declines and the adjustment following the end of the mining boom is close to runnings its course.</p>
<p>"Around one-quarter of all employees will have received a 3.5 percent pay rise following the increase in national minimum and award wages on July 1," Debelle said.</p>
<p>"For some retail and public sector employees, we are also seeing some new enterprise bargaining agreements signed following a lengthy period where wages had been frozen."</p>
<p>Debelle suggested that the slow wage growth over recent years can be attributed somewhat to workers reluctance to leave their jobs and go after a better paying job.</p>
<p>"One of the factors contributing to this is the low level of voluntary job turnover. Workers tend to choose to leave their job for a better job – be it in conditions or pay," he said.</p>
<p>"The fact that little of this is occurring is likely to be contributing to the subdued wages growth."</p>
<p>"Some firms are attempting to retain staff by using non-wage incentives, including flexible work arrangements, shares, subsidised gym memberships, development opportunities and additional annual leave."</p>
<p data-gtm-vis-recent-on-screen-6236702_632="68492" data-gtm-vis-first-on-screen-6236702_632="68492" data-gtm-vis-total-visible-time-6236702_632="4000" data-gtm-vis-has-fired-6236702_632="1">"Over the past few years, there has been a large increase in vacancies but only a small decline in the unemployment rate to date," he said.</p>
<p>IFM Investors chief economist Alex Joiner called the wage growth release "right on expectations."</p>
<p>"Notable from the ABS that all types of wages growth were better in these data, EBAs, awards and individual arrangements - seemingly a positive for at least solid outcomes to keep coming in the next few quarters - assuming the labour market holds up," he tweeted.</p>
<p>Westpac's David Goodman said that despite the growth being muted, in annual terms at least wages are heading in the right direction.</p>
<p>Paul Bloxham, chief economist at HSBC, told the Australian Financial Review that a positive swing in wage growth would be encouraging for the RBA. </p>
<p>He said if wages improve, and continue to do so over the coming months, there’s no doubt that the RBA could consider raising rates as early as mid-2019.</p>
<p><span> </span></p>
<p> </p>
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jrobinson-rf4aSBido9

Muted wages growth leaves RBA on interest rate rise wait and see

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<p>This week Reserve Bank of Australia governor Philip Lowe gave <a href="https://www.rba.gov.au/speeches/2018/sp-gov-2018-06-13" target="_blank">one of the more revealing speeches</a> one is likely to hear from a central banker.</p>
<p>It touched on many of the recurring themes in this column – sluggish wage growth, crazy levels of household debt, persistently low inflation, a long period of low interest rates, and a chunk of the country feeling they are not sharing in national prosperity.</p>
<p>But, most strikingly, Lowe hinted that the RBA’s official interest rate – the cash rate – might not rise until wage growth returns to the long-term trend.</p>
<p>Lowe began with the following familiar fact:</p>
<p>Over recent times, wages growth around the 2% mark has become the norm in Australia. Some time back, the norm was more like 3 to 4%.</p>
<p>He then turned to a range of possible explanations for this sluggish wages growth. A leading factor is that there is still slack in the labour market, with unemployment stubbornly stuck around a relatively high 5.5%. Relative to what? That, of course, is the key question.</p>
<p>Lowe suggested that 5% is the traditional estimate used to gauge full employment in Australia. But it could be lower, noting that:</p>
<p>...in a number of other countries, estimates of the unemployment rate associated with full employment are being revised lower as wage increases remain subdued at low rates of unemployment.</p>
<p>Then there’s underemployment. Lowe observed:</p>
<p>… around one-third of workers work part-time, with most of these people wanting to work part-time for personal reasons [but] around one-quarter would like to work more hours than they do; on average, they are seeking an extra two days a week … This suggests an overall labour underutilisation rate of 8¾%.</p>
<p>Turning to technology, Lowe pointed out that recent technological advances have tended to be in information technology, rather than large new machines. Moreover, a relatively small slice of successful firms in a few sectors of the economy tend to adopt this technology.</p>
<p>Those firms do well – as do their workers. But lagging firms that cannot successfully adopt these technologies get put under pressure. According to Lowe’s thinking, those firms respond by keeping a lid on wages to remain competitive.</p>
<p>All of this has implications for the real value of debt and for consumer spending, As Lowe put it:</p>
<p>Many people who borrowed expected their incomes to grow at something like the old rate rather than the current rate.</p>
<p>Well, indeed.</p>
<p>The really candid part came when Lowe concluded with what this meant for monetary policy. It is worth quoting him in full:</p>
<p>Any increase in interest rates, however, still looks to be some time away. The [RBA] board will want to have reasonable confidence that inflation is picking up to be consistent with the medium-term target and that slack in the labour market is lessening. At this stage, a sustained pick-up in inflation to around the midpoint of the target range is likely to require faster wages growth than we are currently experiencing. There are reasonable grounds to expect that this increase in wages growth will occur. But, for the reasons I have spoken about today, this increase is likely to be only gradual. Given this, there is not a strong case for a near-term adjustment in monetary policy.</p>
<p>This is a striking statement. First, central bankers are usually intentionally vague about how they make policy. Not so Lowe in this speech. He essentially said there would be no rise in interest rates until wages growth is above 3%. Wow!</p>
<p>My first reaction, after the shock at his candidness wore off, was “that could be a while”. But if that’s how the RBA is really thinking about this, then predictions of no rate rise this year are not only solid, but you can lock in a 1.5% cash rate for 2019, too.</p>
<p>The factors that could boost wages growth enough to get back to historical levels are slow-moving – centred around changes in labour-market policy and technology.</p>
<p>This all contrasts rather starkly with the United States. On Wednesday the United States Federal Reserve <a href="https://www.federalreserve.gov/monetarypolicy/files/monetary20180613a1.pdf" target="_blank">raised official interest rates by 25 basis points</a> – the second such bump this year. The Fed also signalled two more hikes this year.</p>
<p>In the US unemployment is <a href="https://ycharts.com/indicators/unemployment_rate" target="_blank">down to 3.8% and inflation is picking up</a>. Fed chair Jay Powell needs to raise rates steadily to avoid inflation being too high, as opposed to too low.</p>
<p><img src="https://counter.theconversation.com/content/98240/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">I bet Governor Lowe wishes he had that problem to navigate.</p>
<p><span><a href="https://theconversation.com/profiles/richard-holden-118107" target="_blank">Richard Holden</a>, Professor of Economics and PLuS Alliance Fellow, <em><a href="http://theconversation.com/institutions/unsw-1414" target="_blank">UNSW</a></em></span></p>
<p>This article was originally published on <a href="http://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/vital-signs-poor-wage-growth-means-interest-rates-could-be-low-for-a-long-time-98240" target="_blank">original article</a>.</p>
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j.ballantyne1990-6AQqhLzZaK

Poor wage growth means interest rates could be low for a long time: Richard Holden

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<a href="https://theconversation.com/profiles/saul-eslake-665" style="font-family: Tahoma, Helvetica, Arial, sans-serif; font-size: 12.16px;">Saul Eslake</a><span style="color: #333333; font-family: Tahoma, Helvetica, Arial, sans-serif; font-size: 12.16px;">, </span><em style="color: #333333; font-family: Tahoma, Helvetica, Arial, sans-serif; font-size: 12.16px;"><a href="https://theconversation.com/institutions/university-of-tasmania-888">University of Tasmania</a></em>
</h1>
<p>Do higher profits necessarily lead to higher wages? The answer, as borne out by the data below, might surprise you. In fact, wages growth is more likely to arise from smart policy settings that directly boost economic and employment growth.</p>
<p>Australian wages growth is, as Reserve Bank governor Philip Lowe <a href="https://www.rba.gov.au/speeches/2017/sp-gov-2017-09-21">recently noted</a>, “the slowest since at least the mid-1960s”. Treasurer Scott Morrison recently <a href="https://sjm.ministers.treasury.gov.au/media-release/085-2017/" target="_blank">asserted</a> that a sustained <em>increase</em> in profitability is a prerequisite for a pick-up in wages growth.</p>
<p>But there is little data to support the idea that wages and profits are connected.</p>
<p><img src="https://cdn.theconversation.com/files/188524/width754/file-20171003-3782-1ws0esq.png" alt=""><span class="attribution"><span class="source">The Conversation/Author provided</span>, <a class="license" href="https://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span></p>
<p>There does not appear to be any “leading” relationship between growth in pre-tax company profits and growth in wages, even if the mining sector (which accounts for a good deal of the fluctuations in profit growth over the past dozen years) is excluded.</p>
<p><img src="https://cdn.theconversation.com/files/188527/width754/file-20171003-3124-1ta5b97.png" alt=""><span class="attribution"><span class="source">The Conversation/Author provided</span>, <a class="license" href="https://creativecommons.org/licenses/by-nd/4.0/" target="_blank">CC BY-ND</a></span></p>
<p>Some relationship between profit <em>margins</em> (that is, profits as a proportion of sales revenue) and wages might have existed in the past. However, that appears to have broken down in the years since the peak of the commodities boom, in 2011-12, as you can see in the following chart.</p>
<p>Since then, aggregate profit margins have risen to levels not seen since the early 2000s, but wages growth has continued to slow.</p>
<p><img src="https://cdn.theconversation.com/files/188529/width754/file-20171003-12163-1qrzjgd.png" alt=""><span class="attribution"><span class="source">The Conversation/Author provided</span>, <a class="license" href="https://creativecommons.org/licenses/by-nd/4.0/" target="_blank">CC BY-ND</a></span></p>
<p>Rather than being a precursor to faster growth in wages, the growth in Australian company profits in recent years appears to be part of a broader global pattern: the share of aggregate income accruing to capital is rising while that accruing to labour is falling.</p>
<h2>In line with global trends</h2>
<p>Researchers from the International Monetary Fund (IMF) have provided a plausible set of explanations for these developments in their <a href="https://www.imf.org/en/Publications/WEO/Issues/2017/09/19/%7E/media/Files/Publications/WEO/2017/October/pdf/analytical-chapters/c2.ashx" target="_blank">latest World Economic Outlook</a>. They contend that “macroeconomic factors such as labour market slack, inflation expectations and trend productivity growth can account for the bulk of the variation in nominal wage growth … in recent years”.</p>
<p>Echoing <a href="https://www.rba.gov.au/publications/smp/2017/feb/box-b-underemployment-and-labour-market-spare-capacity" target="_blank">a point frequently made by the Reserve Bank of Australia (RBA)</a>, the IMF researchers note: “True labour market slack may … be larger than suggested by headline unemployment rates.” This is because of the growth in the number of workers working fewer hours than they are willing and able to work.</p>
<hr>
<p><em><strong>Read more:</strong> <a href="https://theconversation.com/explainer-how-wage-growth-contributes-to-the-economy-75625" target="_blank">Explainer: how wage growth contributes to the economy</a></em></p>
<hr>
<p>The researchers find that even in economies where unemployment rates are now below their pre-GFC averages, “involuntary part-time employment … appears to be weighing on wages growth”, alongside “slower-moving drivers … such as automation, diminished medium-term growth expectations and the growing importance of the services sector”.</p>
<p>The IMF researchers conclude that, overall, “wage growth … may continue to remain subdued until involuntary part-time employment diminishes or trend productivity growth picks up”.</p>
<p>All of this suggests that policy measures that seek, in the first instance, to (further) lift corporate profits will not enhance the prospects of a pick-up in wages growth in Australia.</p>
<h2>Preferential taxation not the answer</h2>
<p>As I’ve argued <a href="https://theconversation.com/why-small-business-tax-cuts-arent-likely-to-boost-jobs-and-growth-72658" target="_blank">previously</a>, there’s absolutely no evidence that preferentially taxing small businesses will do anything to boost innovation, productivity, investment or employment. Hence, there’s no reason to think it will do anything to lift wages growth.</p>
<p>Nor is there any <a href="https://www.propertyobserver.com.au/https://economics.mit.edu/files/7666" target="_blank">compelling empirical evidence</a> to suggest that across-the-board tax cuts for larger companies will have any significant impact on employment and hence on wages.</p>
<p>Rather, an acceleration in wages growth is more likely to come from policies that directly boost economic and employment growth – such as increased spending on (well-chosen) infrastructure projects – and that boost productivity growth (including well-targeted education and training initiatives).</p>
<p>A more controversial proposition may be that measures designed to reverse, in part, the shifts in the shares of national income accruing to labour and capital over the past decade or so could also help accelerate wages growth.</p>
<p><iframe style="border: none;" src="https://datawrapper.dwcdn.net/53kAt/5/" frameborder="0" width="100%" height="400"></iframe></p>
<p>Partly because real wages have grown more slowly than labour productivity since the turn of the century (as you can see in the previous chart), the “profits share” of Australian national income is well above its long-run average. The “wages share” is close to a record low.</p>
<p><img src="https://cdn.theconversation.com/files/188692/width754/file-20171003-31723-6uw84z.png" alt=""><span class="attribution"><span class="source">The Conversation/Author provided</span>, <a class="license" href="https://creativecommons.org/licenses/by-nd/4.0/" target="_blank">CC BY-ND</a></span></p>
<h2>Historical precedent</h2>
<p>In some respects, the present situation is the obverse of the “<a href="https://www.rba.gov.au/publications/rdp/1988/pdf/rdp8806.pdf" target="_blank">real wage overhang</a>” that emerged in the second half of the 1970s, whereby real wages surged much faster than productivity.</p>
<p>One of the main purposes of the Hawke government’s <a href="https://theconversation.com/australian-politics-explainer-the-prices-and-incomes-accord-75622" target="_blank">Prices and Incomes Accord</a> was to secure the ACTU’s acceptance that wages would grow more slowly than productivity (and fall in real terms) to eliminate this “overhang” and reduce unemployment.</p>
<hr>
<p><em><strong>Read more:</strong> <a href="https://theconversation.com/australian-politics-explainer-the-prices-and-incomes-accord-75622" target="_blank">Australian politics explainer: the Prices and Incomes Accord</a></em></p>
<hr>
<p>Hence, it could be argued that what is required now is a period during which real wages grow faster than productivity to eliminate what could be termed a “real wage underhang”. That would be difficult to achieve via an accord-type process given the changes in how the labour market works since the 1980s.</p>
<p>And it would be important to ensure that real wages did not grow at a pace relative to productivity growth that led to higher unemployment.</p>
<p><img src="https://counter.theconversation.com/content/83819/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">The government could consider using its submissions to the Fair Work Commission’s annual determinations of the minimum wage, and its approach to wage negotiations with its own employees, as a way of nudging wages growth upwards.</p>
<p><span><a href="https://theconversation.com/profiles/saul-eslake-665" target="_blank">Saul Eslake</a>, Vice-Chancellor’s Fellow, <em><a href="https://theconversation.com/institutions/university-of-tasmania-888" target="_blank">University of Tasmania</a></em></span></p>
<p>This article was originally published on <a href="https://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/is-faster-profit-growth-essential-for-a-pick-up-in-wages-growth-83819" target="_blank">original article</a>.</p>
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Is faster profit growth essential before a pickup in wages growth? Saul Eslake

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<div class="column">GUEST OBSERVER</div>
<div class="column"> </div>
<div class="column">Consumer confidence fell further in the past week to the lowest levels in almost a year. Why the gloom? Well, data showed wage growth remaining near 2 per cent, well below the levels of a few years ago.</div>
<div class="column"> </div>
<div class="column">Still, data in the past week showed the job market to be in good shape with job growth in the past five months the best for an equivalent period in 121⁄2 years.</div>
<div class="column"> </div>
<div class="column">Consumer confidence is also tied to the fortunes of the Aussie dollar and the currency has backed away from US80 cents.</div>
<div class="column"> </div>
<div class="column">Aussie consumers are fretting about slower wage growth, rising energy bills and higher healthcare costs. Of course at the same time the affordability of a rash of spending categories has improved such as food, clothing, travel and transport.</div>
<div class="column"> </div>
<div class="column">Consumers may say they are gloomy, but importantly they are still spending. It’s a case of watch what they do, not what they say. Real retail trade posted the best growth in the June quarter for any June quarter in the past eight years. At the same time, measures of economy-wide spending continue to show firm growth. Certainly if consumer spending was slowing, this would be reflected in business conditions and confidence – but both those metrics remain strong.</div>
<div class="column"> </div>
<div class="column"><a href="https://www.propertyobserver.com.au/images/2017/08/23/Screen%20Shot%202017-08-23%20at%208.09.40%20AM.png" target="_blank">Click to enlarge</a></div>
<div class="column"><img src="https://www.urban.com.au/images/2017/08/23/Screen%20Shot%202017-08-23%20at%208.09.40%20AM.png" alt=""></div>
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<div class="column">One key positive in the past week – the measure of whether it was a good time to buy a major household item rose to +35, above the long-term average of +33.</div>
<div class="column"> </div>
<div class="column">What do the figures show?</div>
<div class="column"> </div>
<div class="column">Consumer sentiment
<p><span></span><span>The weekly ANZ/Roy Morgan consumer confidence rating </span><span>eased 2.2 per cent from 111.7 to a near 12-month low of 109.2 in the week to August 20. Confidence is down 10.3 per cent over the year and below the average of </span>113.2 since 2014.</p>
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<p><span> </span><span>Four of the five components of the index fell in the latest week: </span></p>
<ul>
<li>
<p><span>  </span><span>The estimate of family finances compared with a year ago was </span><span>down </span><span>from +5 to +3; </span></p>
</li>
<li>
<p><span>  </span><span>The estimate of family finances over the next year was </span><span>down </span><span>from +23 to +16; </span></p>
</li>
<li>
<p><span>  </span><span>Economic conditions over the next 12 months was </span><span>down </span><span>from -5 to -6; </span></p>
</li>
<li>
<p><span>  </span><span>Economic conditions over the next 5 years was </span><span>down </span><span>from +5 to -2; </span></p>
</li>
<li>
<p><span>  </span><span>The measure of whether it was a good time to buy a major household item was </span><span>up </span><span>from +30 to +35. </span></p>
<p><span>What is the importance of the economic data? </span></p>
</li>
</ul>
<p><span> </span><span>The </span><span>ANZ/Roy Morgan weekly survey of consumer confidence </span><span>closely tracks the monthly Westpac/Melbourne Institute consumer sentiment index but the former measure is a timelier assessment of consumer attitudes and is now closely tracked by the Reserve Bank.</span></p>
<p><a href="https://www.propertyobserver.com.au/images/2017/08/23/Screen%20Shot%202017-08-23%20at%208.11.08%20AM.png" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="https://www.urban.com.au/images/2017/08/23/Screen%20Shot%202017-08-23%20at%208.11.08%20AM.png" alt=""></span></p>
<p> </p>
<p><span>What are the implications for interest rates and investors?</span></p>
<p>Consumers say that they aren’t overly confident at present. But they are still spending. Whilever wage growth is exceeding price growth then consumers will spend.</p>
<p>Retailers need to watch measures of consumer sentiment but not unduly worry about survey results. </p>
<p><em>Craig James is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>.</em></p>
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cjames-5S2v74qSNK

Consumers wary, but still spending

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<p><img src="https://counter.theconversation.edu.au/content/82580/count.gif?distributor=republish-lightbox-advanced" alt="The Conversation" width="1" height="1"></p>
<p>GUEST OBSERVER</p>
<p>Is the Reserve Bank of Australia’s monetary policy on a collision course with itself? Quite possibly.</p>
<p>The key data and evidence this week were employment figures in Australia, retail sales in the United States, and minutes from the Reserve Bank of Australia board and US Federal Open Market Committee (FOMC).</p>
<p>First, the data. ABS figures released Wednesday provided more evidence of sluggish wage growth. </p>
<p>Wages nationally grew 0.5% in the June quarter, translating to 1.9% year on year. Worse still, private-sector wages grew only 1.8%, compared with 2.5% for government employees. All of this puts increased pressure on family budgets at a time when energy prices are rising rapidly.</p>
<p>Meanwhile, the RBA board minutes seemed like they were describing a different economy. In terms of consumer spending, the RBA pointed to the rising values of retail sales in April and May and growth in consumption in the June quarter. The minutes also noted:</p>
<p><em>"Beyond the June quarter, rising employment and stronger household income growth were expected to support consumption growth, which was forecast to be a little above its average of recent years."</em></p>
<p>The minutes were also rosy when it came to the labour market, stating that employment had increased in every state since the start of the year, including in states with mining. The RBA noted:</p>
<p><em>"This provided further evidence that the drag on economic activity from earlier declines in the terms of trade and falling mining investment were running their course. Over this period, around 165,000 full-time jobs had been created, labour force participation had risen and average hours worked had increased."</em></p>
<p>Figures released by the Australian Bureau of Statistics on Thursday showed that employment itself rose in July, with 27,900 jobs created. Unemployment rate fell from 5.7% to 5.6%, and labour force participation was a healthy-ish 65.1%.</p>
<p>I guess the only wrinkle is that these workers aren’t getting paid very much.</p>
<p>Markets and commentators widely interpreted these minutes and various other remarks by governor Philip Lowe as suggesting that the next interest rate move would be an upward one.</p>
<p>But then there’s the problem of the massive household debt Australians hold. RBA figures showed that as of March this was 190% of annual disposable income. Combine that with the fact that one-third of mortgage holders don’t have a one month buffer of payments and it makes an interest rate rise look rather risky.</p>
<p>The RBA knows this, of course, noting in the minutes:</p>
<p><em>"Members regarded conditions in the housing market and household balance sheets as continuing to warrant careful monitoring."</em></p>
<p>To summarise: growth and inflation seem to point to an interest-rate rise in the medium term; unemployment rates do too. Sluggish wages growth points to a cut, but a cut might further fuel housing prices. </p>
<p>And those high prices have left Australian households so highly leveraged that a modest rate rise could cause a wave of financial distress and perhaps mortgage defaults. That would lead to fire sales, damage bank balance sheets, and wipe billions of the market capitalisation of the four largest ASX listed companies.</p>
<p>The RBA has to raise, but it has to cut. That’s what I mean by a collision course.</p>
<p>In the US, some brighter news. Retail sales shot up 0.6% last month. This was the largest gain since December 2016, and further evidence of a strengthening economy.</p>
<p>This was reflected in the minutes of the FOMC which observed that:</p>
<p>"…economic conditions would evolve in a manner that would warrant gradual increases in the federal funds rate, and that the federal funds rate was likely to remain, for some time, below levels that are expected to prevail in the longer run."</p>
<p>The bottom line from the long FOMC minutes was that things appear to be on track, with monetary policy still helping to bolster the labour market and get inflation back in the target zone.</p>
<p>The US isn’t in the clear yet, but it looks like the Federal Reserve under Janet Yellen may have pulled off a remarkable rebuilding of the US economy.</p>
<p>In Australia it’s much less clear. With huge household debt, low wage growth, and rising energy prices, the path back to “normal” economic conditions may take longer than in the US.</p>
<p><span class="fn author-name"><a href="https://theconversation.com/profiles/richard-holden-118107" target="_blank">Richard Holden</a> is </span>Professor of Economics and PLuS Alliance Fellow, UNSW and author for The Conversation.</p>
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