CBA data shows the Fair Work Commission's wage boost was smaller than economists had expected
Australian wage growth edged higher in August, but economists say the pickup does not signal an improvement in labour market conditions, according to the latest CommBank Wage and Labour Insights series.
Annual wage growth rose to 3.3% in August, up from 3.2% in July and the strongest reading since June 2025. Quarterly growth held steady at 0.8% over the three months to August, though unrounded figures show a slight rise to 0.84%.
CommBank Economist Harry Ottley attributed the momentum largely to the Fair Work Commission's Annual Wage Review, which lifted minimum wages by 4.75%, along with contributions from several large Enterprise Bargaining Agreements.
He cautioned, however, against reading too much into the figures.
"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," Ottley said.
Ottley noted that wage growth for individual employees had cooled, as employers reported finding it gradually easier to fill vacancies, a dynamic that has helped counteract upward pressure on wages from the FWC review.
Employment growth holds near break-even
On the employment side, CBA's Labour Insights series estimated around 20,000 jobs were added in August, a pace broadly in line with the so-called break-even rate needed to keep the unemployment rate stable.
"Our data is not signalling a material pick-up in employment momentum in recent months," Ottley said.
CBA economists still expect employment growth to soften and the unemployment rate to rise, peaking at 4.7% in late 2027.
FWC boost smaller than expected
The bank also revised down its Wage Price Index forecast for the third quarter. Ottley said the FWC review's impact on broader wage growth had fallen short of expectations.
"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," he said.
He added that CBA had downgraded its WPI forecast from one per cent to 0.9% for Q3 2026.
Ottley also drew a contrast with the wage surge of 2022 and 2023, which played out against an exceptionally tight labour market and large one-off wage resets across several sectors, conditions he does not expect to be repeated.
South Australia recorded the strongest wage growth of any state in August at 3.9%, overtaking Western Australia, which rose to 3.8%.
Tasmania came in third at 3.7%. Queensland, New South Wales and the Northern Territory each sat at 3.3%, while Victoria remained the weakest state at three per cent.
