Australian national accounts, December quarter 2025

Q4 GDP: 0.8%qtr, 2.6%yr. Q4 Domestic Demand: 0.5%qtr, 2.9%yr. Productivity: Total 1.0%yr, Market Sector 1.5%yr.

The Australian economy grew by 0.8%qtr in the December quarter. This increase and revisions to previous quarters left year-ended growth at 2.6% – the strongest since the March quarter 2023.
The Q4 national accounts reinforce the view that the economy is now in the upswing phase of the cycle, with momentum clearly accelerating in the second half of 2025. But there are caveats: consumer spending surprisingly slowed in Q4, even as overall domestic demand strengthened.
As we predicted, the supply side of the economy is normalising with productivity growing 1.0%yr across the economy and 1.5%yr in the market sector. This has helped slow growth in the economy’s cost base, with growth in unit labour cost easing to below 4%yr for the first time since the pandemic.
Whether this improvement can be sustained remains uncertain. A further acceleration in demand and a retightening in labour market conditions could see wages growth and hours worked reaccelerate, placing renewed upward pressure on costs and risking a reversal of recent progress. This is not yet in evidence, though, and domestic inflation pressures could subside quickly if demand instead slows.

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