Australia’s labour market is holding up strongly despite a slowdown in hiring, with wages steady and unemployment still low, according to new Commonwealth Bank (CBA) data that comes as markets brace for possible Reserve Bank rate rises in 2026.
The labour figures land as markets increasingly price in the risk of fresh rate hikes in 2026, after a late‑2025 pick‑up in inflation forced the Reserve Bank to abandon talk of further cuts. Australia’s cash rate has been on hold at 3.6% since August 2025, but economists warn that stronger‑than‑expected growth, resilient employment and firmer wage readings could push the RBA towards tightening this year.
The latest CBA Wage & Labour Insights report, drawing on de‑identified salary flows from around 400,000 CBA accounts, shows wage growth “held steady in December, with quarterly growth unchanged from November and annual growth easing slightly to 3.1%.”
Western Australia continues to lead the nation, with wages up 3.6% in the year to December, despite slower growth than the previous month.
The ACT matched WA’s pace, while Tasmania and South Australia followed closely at 3.4%. New South Wales and Queensland both recorded 3.2%, with Victoria slightly lower at 3%. The Northern Territory saw the slowest wage growth at just 2.5%, underscoring ongoing regional differences.
Employment growth cooled in December, with an estimated 23,000 jobs added – a slight decrease from November, but broadly in line with previous months. The unemployment rate remains at 4.3%, pointing to a labour market that is “still on the tighter side.”
“Wage growth held steady in quarterly terms, but annual growth moderated a touch,” said Belinda Allen (pictured), CBA head of Australian economics.
The labour market remains tight, with limited spare capacity contributing to inflation that is still too high. We expect wages growth to remain around current rates of growth over the next year, and the RBA is expected to lift the cash rate in 2026.
“Our Labour Insights series shows continued solid jobs growth, even as hiring slows from earlier peaks. We judge the labour market to be slightly tight and expect the unemployment rate to stay near current levels through 2026.”
CBA says its Wage & Labour Insights series offers an early snapshot of wages and employment trends at potential policy turning points, ahead of official ABS releases. While jobs growth has softened from the strength seen in 2022 and 2023, Allen said the data still point to a resilient labour market.
“As we move into 2026, we’ll be watching closely for any shifts in wage momentum or hiring activity," she said. “Our data gives us an early read on the labour market, and right now it’s clear that resilience remains a defining feature, even as economic conditions evolve.”
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