Australia's economy grew 0.4% in the June quarter and 2.1% through the year, according to the Australian Bureau of Statistics (ABS), a result that points to a household sector still treading carefully despite a resilient overall economy.
Grace Kim, ABS head of national accounts, said the underlying picture was softer than the headline figure suggests.
"Economic growth remained subdued in the June quarter as households continued to behave cautiously,” Kim said. “While increased spending and business investment occurred in pockets of the economy, imports supported much of the growth, moderating its contribution to overall GDP growth."
Westpac Economics data shows the outcome extended a run of moderate quarterly GDP growth, following 0.3% in the March quarter, while GDP per capita was flat over the quarter and up just 0.7% over the year — underscoring that per-person living standards remain under pressure even as the aggregate economy expands.
Household consumption rose 0.4% in the quarter, with spending subdued across most categories.
The Middle East conflict weighed on discretionary spending, with fuel consumption falling in response to elevated prices and both domestic and international travel pulling back.
Vehicle purchases were a standout, jumping 10.3% as households continued shifting toward electric vehicles — a trend Kim linked to household budgeting rather than simple preference.
"The rise in electric vehicle purchases may have reflected households taking a longer-term approach to cost of living pressures, with some choosing EVs to help reduce ongoing expenses," she said.
Private business investment slipped 0.5% for the quarter, largely reflecting a pullback in machinery and equipment spending tied to data centre fit-outs after a strong March quarter, though investment in data centres remains elevated overall.
Purchases of planes and industrial transport equipment partly offset the decline, and annual business investment remained a healthy 10.4% higher than a year earlier.
For brokers assessing client borrowing capacity, two data points stand out: wages growth and the household savings buffer. Compensation of employees rose 1.5% for the quarter on the back of continued competition for skilled labour, along with bonuses and redundancy payments, while the household saving ratio ticked up slightly, from 6.4% to 6.5% — suggesting households are keeping a modest buffer even as spending stays measured.
On an annual basis, the first estimates for the 2025–26 financial year show GDP rose 2.4%, with GDP per capita up 0.8%, driven by stronger growth in service industries, which make up more than 70% of the Australian economy.
For brokers, that uncertainty will come into sharper focus at the RBA's next cash rate decision on 29 September, with NAB, CBA, and ANZ now tipping a rate rise to 4.6% before year's end, while Westpac remains the outlier forecasting no change through the rest of 2026 — a split worth flagging for clients weighing fixed versus variable rates.
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