Wage growth stable, but divergence under the hood in Australia

Key findings

The WPI rose 0.8% q/q in Q3, keeping annual wage growth unchanged at 3.4%. While the WPI is a lagging indicator, the stability supports our view that the labour market remains tight.

Looking ahead, we expect the labour market to gradually cool, with unemployment hitting 4.6% by the middle of next year and wage growth stabilising at around 3.2%.