Australian national accounts, September quarter 2025

Q3 GDP: 0.4%qtr, 2.1%yr. Q3 Domestic Demand: 1.2%qtr, 2.6%yr. Q3 Productivity: Total +0.8%yr, Market (Non-Mining): 1.4%yr

The Australian economy grew by 0.4%qtr in the September quarter. This increase and revisions to previous activity estimates left year-ended growth at 2.1% – the strongest since the September quarter 2023.
The headline growth masked a solid 1.2%qtr increase in domestic demand, which was offset by volatile inventories, net exports and statistical discrepancy. While consumer spending growth normalised after a bumper June quarter result, it was new business investment that outperformed. But here too there are caveats: engineering construction declined, new building grew from low base, while the outsized gains in machinery were narrowly driven by data centres fit outs and aircrafts.
As we predicted, the supply side of the economy is normalising with productivity growing 0.8%yr across the economy and 1.4%yr in the market (non-mining) sector. If the demand impulse eases while supply is normalising, domestic inflation pressures might be less than some fear. It is worth noting the pick-up in aggregate unit labour costs partly reflects the timing of school holidays boosted leave-taking, so hours paid exceeded hours worked by more than usual.

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