Australian national accounts, March quarter 2025

Economic recovery stalls. Q1 GDP: 0.2%qtr, 1.3%yr. Q1 Domestic Demand: 0.2%qtr, 1.9%yr.

Economy is barely growing, +0.2% in Q1, annual growth stalling at 1.3%yr over the last two quarters.
Aggregate productivity continues to fall but reflects expanding non-market sector and falling mining productivity. We estimate that productivity across the rest of the economy is tracking a 1.0%yr pace with unit costs up a more benign 3.8%yr.
The March quarter data were unambiguously soft, even aside from some of the special factors and other ‘wrinkles’ in the detail. The RBA expected consumption to be weak in the quarter but will still be concerned by this ongoing sluggishness. The signs of softening public demand, if sustained, will no doubt also be unsettling.
While ever productivity growth remains as slow as it is currently, though, the RBA will remain sensitive to domestic cost pressures. This means it will probably still want to see quarterly inflation updates to be confident to reduce monetary restrictiveness further.

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