Wage Growth Holds Firm as Australia's Job Market Shows Signs of Cooling

Australia's wage growth remained steady in June, but the picture could change in coming months, according to the latest CommBank Wage and Labour Insights report.

Key Points:

• Wages rose 0.8% in the three months to June, while annual wages growth held steady at 3.1%.
• Employment increased by an estimated 17,000 jobs in June, down slightly from 18,000 in May.
• The 'quits rate' continues to fall, indicating a cooling labour market.

Wage Growth Outlook: "The next few months will be important to watch. The increase in minimum and Award wages of 4.75% will likely see Q3 wages pressure pick up," CommBank Economist Harry Ottley said. CBA Economists expect wage growth to tick higher soon, forecasting WPI growth of 1.0%/qtr in Q3.

Employment Growth Slowing: The Australian labour market is showing signs of softening, with jobs growth of 17,000 in June. The data suggests employment growth is a touch below the 'break-even' level required to keep the unemployment rate from rising. CBA Economists expect the unemployment rate to rise to a peak of 4.8% in Q4 2027 from 4.4% at present.

Quits Rate Points to Easing Conditions: The 'quits rate' measures the share of workers who voluntarily leave their job. CBA's proxy for this rate continues to fall, consistent with a labour market that has kept cooling since peak tightness in 2022. "Overall, the data supports our broader view that the labour market continues to loosen gradually but remains a little too tight for comfort for the RBA," Ottley said.

State-Level Wage Growth:

• Western Australia retained the strongest wages growth at 3.7%.
• South Australia lifted to 3.7%, making it equal-highest with WA.
• Tasmania recorded the biggest pick-up, jumping to 3.3%.
• Victoria recorded the slowest wages growth at 3.0%.