Research Team at TDS, notes that the Australian Q4 Wage Index rose 0.5%/qtr, less than the market (+0.6%) and TD’s expectations (+0.7%), to rise 2.2%/yr. Key Quotes “Private sector wages were stable (+0.5%/qtr), but it was weakness in public sector wages (from 0.8%/qtr to +0.5%/qtr) that drove the weaker headline. Although wage growth in annual terms is the lowest since this series was recorded from 1997, there is no monetary implications from this report. Low wages are helping to contain domestic inflation, helping to counter the impacts from exchange rate pass through, which is what we saw last year. We also got a downside surprise in Q4 Construction work done, printing –3.6%/qtr vs TD at –2.3% and the market at –2%. The breakdown shows that engineering declined 9.5%/qtr, more than the 5% fall we were anticipating, to be down nearly 15%/yr. This fall reflects the unwind in mining investment which we expect to continue. In contrast, residential building work rose 2.8%/qtr (thanks to apartment activity surging) while non residential building rose 2.5%/qtr (pick up in commercial and hotel building activity?) which is providing some offset to the decline in mining. Today’s outcome may see the market lower their GDP forecasts a notch.” For more information, read our latest forex news.