Real wages fall as inflation rises; NAB’s bumper profit; $14.2b bid for BlueScope

Real wages fall as inflation rises; NAB’s bumper profit; $14.2b bid for BlueScope

News in brief

National Australia Bank’s net profit jumped 30 per cent to $2.2 billion in the December quarter – a record result that sent its share price up more than four per cent.

 

Oil and gas giant Santos will cut 10 per cent of its workforce and has placed its oil and gas business in Australia under review after reporting a 35 per cent drop in full-year profit on the back of weak oil and gas prices.

 

Corporate regulator ASIC is undertaking a review of advisers, worried that superannuation funds are using lead generation companies to inappropriately convince customers to switch funds.

 

The Stokes family controlled SGH Ltd and Nasdaq listed Steel Dynamics, have launched an improved $14.2 billion bid for BlueScope.

 

JPMorgan Chase aims to open over 160 branches in more than 30 states across the US this year, part of a multi-billion dollar investment into its bricks-and-mortar network that reflects a broader belief by US banks in Americans wanting in-person banking.

Fear-o-meter

Is the cost-of-living crisis over? Clearly not, purely based on the wages data from the ABS yesterday. But as always, the real picture is more nuanced than a yes or no answer.

 

In some parts of the economy things are getting better. But not all parts of the economy.

 

Renters are under stress. About one-in-five pay more than 30 per cent of their income on rent. The cost-of-living is still a crisis for many of them.

 

People with a mortgage certainly felt the relief of rate cuts last year, though insurance costs have risen. Their situation may have improved.

 

In some lower paid industries, notably aged care and childcare, workers have received decent wage hikes in the past 12 months. They may well be finding it a bit easier.

 

Similarly, households relying on government benefits, like pensions, have received increases, though not always enough to offset inflation. Surveys suggest young adults are among the hardest hit.

 

The point is that there is some cost-of-living relief for some cohorts. But when inflation is higher than nominal wage increases, you can be confident that the cost-of-living crisis isn’t over yet.

Fear & Greed Q+A today

On the strength of regional market house prices compared to capital cities, the areas that boomed, and the ones to watch:

 

“If you go back to the pandemic, which was a really high-profile time for the regions, a lot of people were leaving the capitals to go to regional Australia. The strongest growth performers back then were generally high-profile regional markets like Byron Bay, Noosa, the Gold Coast, Sunshine Coast. Those areas were seeing extraordinary growth because they ticked the box of being liveable, commutable, had a lifestyle element, and were generally affordable at least back in 2020. You wouldn’t argue that now. Some markets like Byron actually went through a pretty sharp correction from the middle of 2022 as interest rates rose and severe weather events hit. Byron Bay really did wear about a 15% downturn between 2022 and about 2024. What we’re seeing now is radically different.”

Real wages in Australia went backwards last year, as rising inflation ate into take home pay packets. The erosion challenges the federal government’s claim that it's addressing the cost-of-living crisis. Nominal wages rose by 3.4 per cent last year, according to the ABS. Inflation was 3.8 per cent, so real wages – what your pay can buy – fell. Annual growth in public sector wages, at four per cent, outpaced growth in private sector wages, at 3.4 per cent, for the fourth quarter in a row. That was due to new state public sector agreements, and big pay rises for groups including aged care workers.

Greed-o-meter

Destination	2026 Interest
Nha Trang, Vietnam	+140%
Kuala Lumpur, Malaysia	+95%
Palau	+70%
Phu Quoc, Vietnam	+65%
Hyogo, Japan	+60%
Kos, Greece	+45%
Mallorca Island, Spain	+35%
Budapest, Hungary	+30%
Nadi, Fiji	+25%
Portland, USA	+25%

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Source: Expedia