Key points
- Annual wage growth increased to 3.3%, while quarterly growth remained at 0.8%.
- South Australia recorded the fastest pace of wage growth at 3.9%/yr overtaking WA for top spot.
- CBA Labour Insights data suggests employment increased by around 20,000 jobs in August.
Wage growth picked up in August, but the momentum does not reflect a strengthening in labour market conditions, according to the latest CommBank Wage and Labour Insights series .
Annual wage growth increased to 3.3 per cent, up from 3.2 per cent in July, the strongest level since June 2025. Quarterly wage growth remained unchanged at 0.8 per cent over the three months to August.
At the same time, the CBA Labour Insights series suggests employment increased by around 20,000 jobs in August, keeping employment growth close to the ‘break-even rate’.
Wage growth ticks higher, but the labour market is loosening
The CommBank Wage Insights series has ticked higher in recent months, with growth remaining at 0.8 per cent in rounded terms in the three months to August, while unrounded growth rose to 0.84 per cent.
CommBank Economist Harry Ottley said the pickup in momentum likely reflects the Fair Work Commission (FWC) Annual Wage Review, which lifted wages by 4.75 per cent, with several large Enterprise Bargaining Agreements also contributing.
But the pickup is still smaller than initially expected, Ottley said.
“We expected this pickup in momentum in our data in August but do not see the stronger wage growth as evidence of a strengthening labour market,” he said.
“Our methodology means it can take several months to fully reflect shifts in momentum. Even so, we are now more confident that the impulse from the FWC Annual Wage Review on broader wage growth has been smaller than we previously expected.”
Ottley said that wage growth for individual employees had cooled, amid a broader labour market in which employers were slowly finding it easier to get the workers they needed, helping offset upward pressure on wages created by the FWC review.
The lack of momentum in the wages market is at odds with the growth seen in 2022 and 2023, when sizeable increases were awarded into an exceptionally tight labour market for employers and large one-off wage resets were occurring in several sectors.
“We think those exceptional circumstances led our data to underestimate the quarterly pulse. We do not expect them to be repeated to the same degree in Q3 26, and have downgraded our Wage Price Index forecast from 1.0% to 0.9%,” Ottley said.
SA overtakes WA to lead in wages growth
The latest CommBank Wage Insights data showed South Australia recorded the strongest wage growth in the nation during August at 3.9 per cent, up from 3.6 per cent in July and overtaking Western Australia for top spot.
WA also saw wage growth pick up in August, lifting to 3.8 per cent from 3.6 per cent, while Tasmania’s wage growth increased to 3.7 per cent making it the third strongest rate in the country.
Queensland, New South Wales and the Northern Territory all sat at 3.3%. QLD and NSW each edged higher in the month, while the NT was marginally softer. Victorian wage growth remains the weakest in the country at 3 per cent.
Employment growth holds steady
The CommBank Labour Insights series saw employment growth of around 20,000 jobs in August, keeping employment growth close to the ‘break-even rate’ required to keep the unemployment rate steady on an unchanged participation rate.
“Our data is not signalling a material pick-up in employment momentum in recent months,” Ottley said.
“We continue to expect employment growth to soften from here, while acknowledging that labour demand has been more resilient than expected so far,” Ottley added.
CBA Economists still expect the unemployment rate to rise from here and peak at 4.7% in late 2027.
