The public sector remains the dominant force driving up wages, which could alleviate the Reserve Bank's fears about the labour market.

Wages growth held steady at 3.4 per cent in the year to September, in line with economist and RBA expectations, the Australian Bureau of Statistics reported on Wednesday .

But signs suggest the momentum in the labour market is slowing.

Growth was mainly driven by public sector wages, which grew by 3.8 per cent, and particularly by state governments.

"State government pay rises contributed 82 per cent of public sector wage growth this quarter," the bureau's head of prices statistics Michelle Marquardt said.

Private sector growth slowed from 3.4 to 3.2 per cent and was boosted by the Fair Work Commission's decision to grant a 3.5 per cent increase to w

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