September Quarter GDP
Australian Economy Weekly Update — Week Ending 5 December 2025
The ABS September Quarter National Accounts showed the Australian economy growing 0.4% in the quarter and 2.1% over the year. This is the fastest annual pace in more than two years and slightly above the RBA’s estimate of the economy’s non-inflationary “speed limit.”While still below the pre-pandemic average growth rate, the result confirms a moderate upswing driven by a surge in private investment, particularly in data centres and artificial intelligence infrastructure. Business investment rose, with an estimated $2.8 billion invested in data-centre capacity in just three months, double the previous quarter's spend. This investment boom, alongside sizeable public-sector infrastructure spending, propelled growth even as households continued to restrain discretionary consumption. Government investment also grew 3%, supported by renewable energy, transport and communications projects.
Household consumption rose 0.5% but remained skewed toward essentials such as rent, insurance, utilities and food, which climbed around 1%. Discretionary spending remained soft, while rising wages, bonuses and superannuation investment income helped lift gross disposable income and nudged the household saving ratio up to 6.4%. But the underlying story of the quarter is the rotation from consumption-led growth to investment-led expansion. For the first time since 2015, annual growth in private demand outpaced public demand, signalling a broad-based shift in the engines of growth.
The strength of the investment upswing, combined with tight labour-market conditions, contributed to a lift in productivity growth to 0.8%, yet still below Treasury’s 1.2% medium-term assumption. However, stronger-than-expected economic momentum is complicating the inflation outlook. Annual headline inflation rose to 3.8% in October. With domestic demand firming, major bank economists now consider rate cuts unlikely in 2026, instead pricing in a high probability of a further rate hike. RBA Governor Michele Bullock has cautioned that inflation is not yet sustainably back in the target band and warned that upside risks may re-emerge if growth continues at this pace.
Source: Australian Bureau of Statistics, Australian National Accounts: National Income, Expenditure and Product, Australia, December 2025