Economic Growth in Australia Beats Market Predictions
- admin928749
- Sep 3
- 2 min read
The Australian economy is showing stronger signs of life, growing by 0.6% in the June quarter — a little better than expected — which takes annual growth to 1.8%.
Fresh figures from the Australian Bureau of Statistics reveal the economy is tracking slightly ahead of forecasts from both economists and the Reserve Bank, who tipped 1.6% annual growth.
The June numbers capture the effects of the RBA’s interest rate cuts in February and May. Net disposable income per person nudged up by 0.1% — staying positive through the first half of 2025 — while GDP per person rose 0.2%, the highest since March last year.
So, what’s driving the growth?
Household spending was the big contributor, with non-essential spending jumping 1.4%. People spent more on holidays (thanks to Easter and ANZAC Day), recreation and culture (up 2%), furniture and appliances (up 1.7%), new cars (up 2.4%), and dining out (up 0.7%).
Spending on essentials climbed too. Health costs rose 1.9% during a heavy flu season, while electricity and gas bills jumped 2.9%. Big supermarket promotions also gave food spending a boost.
The household savings ratio dropped to 4.2% in June, but the March quarter figure was revised higher to 5.2%.
Government spending added momentum as well, up 1% in the quarter. That was driven by higher social benefits, more spending on Medicare and the PBS, election costs, and a bump in defence spending due to military exercises. On the flip side, state and local government spending dipped as electricity rebate programs wound down.
Trade helped too, with iron ore and LNG exports rebounding.
The private sector showed some signs of recovery, with productivity (gross value added per hour worked) up 0.5%. But business investment was flat overall — up 0.1% thanks to dwellings, machinery, and intellectual property, but dragged down by a 1.2% fall in non-dwelling construction. Public sector investment fell sharply, down 3.9%.
Treasurer Jim Chalmers welcomed the figures, saying:
“Today’s very welcome numbers confirm the private sector recovery we’ve been planning and preparing for is gathering pace.”
But not everyone is convinced the good run will last. Sean Langcake from Oxford Economics Australia warned this might be the high point for 2025:
“The June quarter benefited from a rebound from a soft March quarter. Business and consumer confidence are still a little shaky, and the labour market appears to be cooling.”
Stay tuned with Aus News Lanka – the leading platform for news for Australians.
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