Australia’s annual wage growth remained steady at 3.4 per cent in the fourth quarter, according to newly released labour market data, signalling a continued moderation from the peaks seen during the post-pandemic rebound.

The Wage Price Index showed that pay packets rose at the same annual pace as in the previous quarter, suggesting that the labour market is settling into a more stable phase after a period of elevated demand for workers.

Quarterly growth was measured at a modest pace, consistent with a cooling but still resilient employment environment.

Economists noted that the figure aligns broadly with expectations and reflects a gradual easing from the higher rates recorded in 2023 and early 2024, when tight labour supply and strong competition for skilled workers pushed wage outcomes higher.

While pay growth remains above pre-pandemic norms, it has stabilised as inflation has eased and job vacancy rates have moderated.

Private sector wages continued to grow at a similar rate to the public sector, with strength observed in industries facing persistent skill shortages.

However, the pace of increases has slowed compared with earlier periods when enterprise bargaining agreements and award adjustments drove stronger uplifts.

The steady annual reading is likely to be closely watched by the Reserve Bank of Australia as it assesses inflationary pressures and the broader economic outlook.

Policymakers have previously signalled that sustainable wage growth in line with productivity gains is consistent with maintaining price stability.

With inflation trending lower and unemployment remaining relatively contained, the latest data reinforce the view that Australia’s labour market is adjusting without a sharp deterioration.

Analysts expect wage growth to remain around current levels in the near term, barring any unexpected shifts in economic conditions.