GDP rose in the September quarter as private investment surged and households prioritised essential spending amid flat per-capita growth.
Australia’s economy expanded in the September quarter, with gross domestic product rising 0.4 per cent and 2.1 per cent over the year, according to the Australian Bureau of Statistics (ABS).
Grace Kim, ABS head of national accounts, said: “Economic growth was steady in the September quarter 2025. The rise this quarter matches the average quarterly growth since the end of the COVID-19 pandemic.
“GDP per capita was flat for the quarter as economic growth was in line with population growth but remained 0.4 per cent higher than a year ago.”
Private investment contributed 0.5 percentage points to quarterly GDP growth, driven by a 7.6 per cent rise in machinery and equipment investment. The ABS said this surge aligned with an increase in capital goods imports and reflected ongoing data-centre expansions.
“The rise in machinery and equipment investment reflects the ongoing expansions of data centres. This is likely due to firms looking to support growth in artificial intelligence and cloud computing capabilities,” Kim said.
Housing investment added 0.2 percentage points to growth, supported by higher dwelling construction and strong real estate turnover amid rising investor demand.
Household spending rose 0.5 per cent in the quarter after a 0.9 per cent rise in June. Essential spending increased 1.0 per cent, driven by payments for banking and superannuation services, electricity and health.
Meanwhile, discretionary spending fell 0.2 per cent following a strong June performance linked to the extended Easter break and end-of-financial-year sales, though it remained 2.3 per cent higher through the year.
Public investment rebounded, rising 3.0 per cent after a 3.5 per cent fall in the June quarter as public corporations led the increase through investment in renewable energy, water, telecommunications and rail transport projects.
State and local government investment grew 1.4 per cent, though it remained 2.4 per cent lower than a year earlier.
Net trade detracted 0.1 percentage points from GDP growth as imports rose 1.5 per cent compared with a 1.0 per cent rise in exports.
According to the ABS, imports were lifted by fuels and lubricants, up 9.8 per cent, and capital goods, up 6.7 per cent, with the latter driven by computer equipment used in data-centre expansions, while export gains were supported by rural and non-rural goods, while services exports were largely unchanged.
Mining profits increased 1.2 per cent despite a fall in production due to maintenance at iron ore and LNG sites as higher export prices and volumes for thermal coal and iron ore supported profitability.
Firms drew down inventories to meet export demand, contributing to a $1.9 billion rundown that detracted 0.5 percentage points from GDP growth, the Bureau stated.
Additionally, household savings strengthened, with the saving-to-income ratio rising to 6.4 per cent from 6.0 per cent in June.
Gross disposable income rose 1.7 per cent, outpacing nominal household spending growth of 1.4 per cent, with higher compensation of employees and superannuation investment income drove the lift, partly offset by income tax payable.
The ABS said compensation growth reflected minimum wage increases along with higher bonuses and redundancy payments in the private sector.
Betashare’s chief economist David Bassanese said the softer-than-expected rise could be “read as a sign the economy has lost momentum” following the June quarter.
“But look beneath the surface and the story is considerably stronger than the headline implies.
“Why? Because aside from a moderation in household consumption growth to a more trend-like 0.5 per cent (down from a punchy 0.9 per cent in June), most other components of demand actually strengthened.
Business investment firmed notably, rising 3.6 per cent after a 0.1 per cent decline in June.
“Dwelling investment lifted 1.8 per cent, up from 0.4 per cent previously. Public demand also rebounded strongly, growing 1.1 per cent compared with just 0.1 per cent in the prior quarter.
“Put together, total domestic demand expanded a solid 1.2 per cent, more than double June’s 0.5 per cent pace,” Bassanese said.
Regarding as to how the Reserve Bank of Australia may interpret this data, Bassanese said the GDP print “likely reduces, rather than increases” the board’s willingness to cut rates any time soon.
“Of course, the RBA could still cut rates next year – if the pace of annualised monthly inflation gains convincingly drifts back into the 2–3 per cent target band,” he said. “But even then, given signs of strengthening demand and potential capacity contraints, the Bank might now be increasingly reluctant to add further stimulus, even if inflation behaves.”
Krishna Bhimavarapu, APAC Economist, State Street Investment Management stated: “Growth rebounded on the back of strong investments and base-effects. However, the shine fades on private consumption that recovered less than we anticipated.”
“The message is clear: consumption remains in the slow lane and rate-hike fever is misplaced. Our call? Hold the cash rate until the fog lifts.”
Ivan Colhoun, CreditorWatch’s chief economist, commented that the softer headline was “mainly due to (temporary) mine maintenance” disguising better developments across housing construction, consumer spending and investment.
“Mathematically these will challenge the RBA modellers as they suggest growth may already be above potential,” Colhoun added. “This is welcome news for businesses and job seekers but not for those hoping for further reductions in interest rates or for the RBA following recent higher-than-expected inflation prints.”
“The latter are likely too early to reflect a cyclical re-acceleration in inflation but still suggest increased risk of an earlier than expected return to monetary tightening without higher unemployment as inflation has not been sustainably returned to target.”
HSBC chief economist, Paul Bloxham, said the September print is “likely to be seen as generally good news” for the Reserve Bank, indicating that the economy is “not too hot or too cold”.
“The pick-up in investment is welcome as it may help to support improvement on the supply-side of the economy. A consumer that is spending more, but is not booming is helpful too.
“The run of figures over the past few weeks clearly suggest there is no need, or room, for the RBA to lower its cash rate further. Inflation is above target, growth is in an upswing and the unemployment rate is still below its estimates of ‘full employment’. Today’s GDP print being a bit more modest in the quarter than expected, and showing an investment rather than consumer led story also means no need to start lifting rates quite yet either,” he added.
“We see the RBA on hold next week and for some time, but see the next move as more likely to be up than down.”
