Australia’s wage growth is holding steady, keeping labour‑driven inflation pressures on the Reserve Bank’s radar and leaving mortgage brokers facing the prospect of at least one more rate rise.
CBA’s latest Wage and Labour Insights, based on de‑identified salary flows from around 400,000 customer accounts, show quarterly wage growth at 0.8% in January and annual growth at 3.1%. Wages have been tracking broadly sideways, with a gradual lift in quarterly outcomes since mid‑2025, and Western Australia continues to report the strongest gains while the eastern states remain steady.
CBA economist Stephen Ottley (pictured) said that “while wage growth is firm but not excessive, weak productivity growth means businesses continue to face elevated labour cost pressures. This underpins our assessment that labour market conditions remain tight and are still contributing to inflation.”
For brokers, that means many customers are seeing some income growth, but not enough to fully offset higher mortgage costs if the cash rate moves again.
Jobs growth is easing, but not collapsing. CBA’s Labour Insights point to an estimated 21,000 jobs added in January, suggesting employment growth is moderating from earlier strength.
Ottley cautioned that the very strong December ABS labour force result may have overstated the improvement, noting that “our internal indicators do not suggest a material re-tightening in the labour market at this stage.”
Unemployment fell to 4.1% in December, signalling a tighter labour market and dampening hopes of near-term RBA rate cuts as inflation remains above target. For mortgage brokers, that backdrop reinforces the likelihood that borrowing costs stay higher for longer, even as some borrowers’ wages edge up.
The CBA figures broadly line up with January’s NAB Business Survey, which shows business conditions around their long‑run average, easing capacity utilisation and still‑solid employment intentions. Together, the surveys point to a labour market that is no longer tightening aggressively, but remains tight enough to keep wage‑driven inflation on RBA’s radar.
Ottley said the outlook will hinge on how the data evolve over coming months.
“Taken together, the January data point to a labour market that is still tight and on a solid footing, but not one that is materially strengthening,” he said in a media release.
CBA economists still expect one further interest rate increase in May, which would take the cash rate to 4.10%, with any policy changes from there likely to be fine‑tuning rather than a fresh tightening cycle – a crucial consideration for brokers guiding borrowers this year.
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