Key points
- Annual wage growth increased to 3.2%, while quarterly growth remained unchanged at 0.8%.
- Western Australia recorded the strongest annual wage growth at 3.6%, while Victoria was the weakest at 2.9%.
- CBA Labour Insights suggests employment increased by around 21,000 jobs in July.
Wage growth picked up modestly in July as the jobs market showed few signs of shifting out of its recent holding pattern, according to the latest CommBank Wage and Labour Insights series .
Annual wage growth increased to 3.2 per cent, up from 3.1 per cent in June, where it had remained for seven consecutive months. Quarterly wage growth was unchanged at 0.8 per cent over the three months to July.
At the same time, the CBA Labour Insights series suggests employment increased by around 21,000 jobs in July, indicating labour market conditions remain relatively steady.
Wage growth tracking below expectations
“The July result points to some strengthening in wage growth, although the increase was smaller than expected given the annual rise in award and minimum wages that took effect from 1 July,” CommBank Economist Harry Ottley said.
The data suggests wage growth momentum has stabilised rather than accelerated, with CBA’s compensation of employees measure – a proxy that measures the total wage bill including bonuses and changing jobs or hours, compared to the wage tracker which focuses on wage inflation – remaining steady at 5.7 per cent in July.
While the full impact of July’s minimum and award wage increases may take time to flow through, so far wage growth is tracking below expectations.
“Our data can take a couple of months to fully reflect changes in momentum, and we will need to see more data before concluding the wage impulse was more modest than we expected. If this continues, the RBA would take some comfort from wages growth remaining contained and be supportive of our view they have finished hiking,” Ottley said.
Western Australia leads the nation in wage growth
Annual wage growth continued to vary across the country, reflecting differences in labour market conditions between states.
Western Australia retained the strongest wage growth in the nation at 3.6 per cent, while South Australia remained firm at 3.5 per cent. Tasmania and the Northern Territory recorded growth of 3.4 per cent.
New South Wales and Queensland both recorded wage growth of 3.2 per cent, while Victoria remained the state with the softest wage growth at 2.9 per cent.
Employment growth remains near break-even
The CBA Labour Insights series points to employment growth of around 21,000 jobs in July, slightly firmer than earlier in the year, however the data suggests labour market momentum has not materially strengthened.
“The data suggests some of the recent increase in official Australian Bureau of Statistics (ABS) employment figures may be overstated, meaning jobs growth could ease back in the months ahead.”
According to the analysis, employment growth remains close to the pace needed to keep the unemployment rate stable, but CBA economists do expect the unemployment rate to continue to rise as the economy slows.
About CBA Wage and Labour Insights
The CBA Wage Insights series uses anonymised and aggregated Commonwealth Bank salary transaction data to create a proxy for wage inflation in Australia and is designed to track and lead movements in the ABS Wage Price Index. On average, approximately 400,000 accounts are sampled each month.
The CBA Labour Insights series uses salary transaction data to estimate employment growth by comparing changes in aggregate wages with estimated wage inflation.
