Today’s National Accounts show the Australian economy grew 0.4 per cent in the quarter, to be 2.1 per cent higher through the year and 2.4 per cent higher in the 2025-26 financial year.
This is a robust result in challenging international circumstances.
It shows the resilience of Australia’s economy in the face of global uncertainty and conflict.
While global circumstances are challenging and people are under pressure, we’ve got a lot going for us and we can see some of this reflected in today’s figures.
Dwelling investment picked up, incomes are growing, there is a solid pipeline of business investment, and the private economy is driving our growth.
Annual growth in Australia was as strong or stronger than every major advanced economy – equal to the United States and much stronger than the rest.
Australia is outperforming when it comes to annual growth, we have stronger employment growth than almost every major advanced economy, and lower gross debt to GDP than every major advanced economy.
We saw quarterly growth moderate in the majority of major advanced economies but it picked up slightly in Australia.
This growth is despite the obvious impacts of the war in the Middle East which started six months ago last Friday.
Australia has not been immune to the impacts of the conflict, which can be seen in the consumption figures and the build up in fuel inventories.
Household consumption grew by 0.4 per cent in the quarter to be 1.8 per cent through the year. Annual growth moderated from 2.4 per cent in the March quarter.
A big driver of consumption in the quarter was the uptake of electric vehicles, reflecting higher fuel costs.
Purchase of vehicles was up 10.3 per cent in the quarter and accounted for almost two thirds of the quarterly increase in consumption.
The conflict saw some components of consumption moderate as expected, with lower fuel spending seeing a 0.6 per cent fall in operation of vehicles and reduced travel seeing a 4.9 per cent fall in services imports in the quarter.
We can also see higher interest rates impacting households, with mortgage interest costs up 10.4 per cent in the quarter but we know that the full impact of the rate rises will flow through in future quarters.
A heartening part of today’s figures was dwelling investment growth which picked up and broadened in the quarter.
There were contributions from both new building investment and renovation activity.
Dwelling investment grew 1.6 per cent in the quarter to be 5.8 per cent higher through the year. This is up from 1.5 per cent in the previous quarter and 4.2 per cent in annual terms. When we came to office, it was going backwards in annual terms by 3.6 per cent.
This comes after data yesterday showing trend building approvals have now risen for 18 months and in the last three months have exceed 18,000 every month.
There are a lot of factors at play in the housing market including higher interest rates and global uncertainty but it is encouraging to see both dwelling investment and building approvals holding up.
New private business investment fell 0.5 per cent in the quarter, but this comes after several quarters of strong growth. In through‑the‑year terms, it was up 10.5 per cent.
While there was some quarterly volatility as data centre fit outs were completed, we saw strength in the quarter from renewable energy projects, aircraft investment and the construction of data centres.
The broad nature of the investment pipeline means that new private business investment last financial year was 12.7 per cent of GDP – the highest in a decade.
The outlook for investment, especially capital expenditure, is stronger in the year ahead. We saw last week that the ABS revised up CAPEX survey estimates in 2026-27 by 15 per cent to be more than $200 billion.
Business investment collapsed under our predecessors, but we’ve been turning that around.
New private business investment is growing at an average of 4.9 per cent per year under the Albanese Government after going backwards by an average of 1.3 per cent per year under the Coalition.
Today’s data also shows real incomes are growing.
Real household gross disposable incomes per capita rose 0.3 per cent in the quarter, to be up 0.9 per cent through the year. In the quarter we came to office they were going backwards 1.3 per cent.
Compensation of employees was up 1.5 per cent in the quarter to be 6.0 per cent higher through the year. This means that the wage share of income is 54.3 per cent, up from the 49.0 per cent we inherited.
Since coming to office, compensation of employees has grown by an annualised average of 7.1 per cent per year, compared to 4.6 per cent per year under our predecessors.
The National Accounts prices measure was steady at 3.1 per cent in annual terms.
This meant that real wages in the National Accounts measure grew 0.3 per cent in annual terms.
New private final demand grew 0.3 per cent in the quarter to be 3.6 per cent higher through the year.
In annual terms, four out of every five dollars of growth in domestic demand was from private demand, not public demand.
New public final demand grew by 0.3 per cent in the quarter to be 2.0 per cent higher through the year.
It contributed 0.1 percentage points to real GDP growth in the quarter, less than half the contribution of new private final demand.
Inventories detracted 0.1 percentage points from growth.
There was a large build up in fuel inventories to meet the increased Minimum Stockholding Obligation, but there was a rundown in mining inventories as better weather facilitated exports.
While productivity fell 0.2 per cent in annual terms, in the quarter it was flat across the economy and up 0.2 per cent in the market sector.
We know that we have a long‑standing productivity challenge in our economy, which is why it was such a big focus of the Budget and continues to be a substantial focus of our economic agenda.
Under the Albanese Government, economic growth is outperforming major advanced economies, business investment has strengthened, more than 1.3 million jobs have been created, unemployment is low, participation is at near record highs and wages growth is solid.
Australians have made a lot of progress in our economy in the past few years, but there’s more work to do because people are still under pressure and the global economy is increasingly uncertain and volatile.
That’s why our economic plan is all about boosting productivity and resilience, helping more Australians own their own home, cutting income taxes and delivering cost of living relief.
Political opponents and other opportunists like to talk down our economy and our Budget, but these National Accounts are a robust reminder that we are better placed than other countries to weather uncertain times in the world.
