Australian wages: Moderation in the mix

Research evidence excerpt

J P M O R G A N

Australia Economic Research

19 August 2026

Australian wages: Moderation in

the mix

Australia’s wage price index rose 0.8%q/q for the fifth consecutive quarter in

2Q26, in line with J.P. Morgan and consensus forecasts. Annual wage growth was

steady at 3.2%oya, down from 3.4%oya a year earlier and well below the late-2023

peak of 4.3%oya. Wage growth in the low 3s is, in our view, consistent with the

RBA’s inflation target. With wage outcomes no longer a source of incremental

inflation pressure, the data support our view that the cash rate will remain stable

through 2026.

The details were somewhat softer than suggested by the headline result. Private

sector wages rose 0.7%q/q (3.1%oya), towards the lower end of the recent

quarterly run rates. While aggregate wage growth should remain supported over

the next year by a higher-than-expected national minimum wage decision, the

underlying signal on organic wage growth appears softer. This was evident in the

proportion of jobs receiving a wage change, which, at 10%, was the lowest share

since 2Q20. The average increase for those receiving a pay rise was steady at 3.9%

compared with 2Q25.

Public sector wages provided the offset, up 0.9%q/q and 3.4%oya, the sixth

consecutive quarter in which public sector annual wage growth has outpaced the

private sector. State government public service jobs were the main driver of public

sector wage growth, supported by scheduled rises under existing Commonwealth

agreements. These public sector wage deals continue to hold up aggregate wage

growth, though the average size of those increases has moderated.

The public sector skew was visible at an industry level. Over the year, health care

(+3.8%oya) and public administration (+3.6%oya) led the industry distribution,

with wage growth in the high 3s, while professional services (+2.5%oya) and

finance (+2.7%oya) remained at the opposite end. Over the quarter, information

technology (+1.2%q/q) and public administration (+1.1%q/q) saw the largest

increases, while retail trade and other services were the weakest at 0.1% (in original

terms).