Australia's Q2 GDP Grows 0.4% as Annual Pace Slows to 2.1% and Labour Costs Rise
Updated
Updated · Westpac IQ · Sep 1
Australia's Q2 GDP Grows 0.4% as Annual Pace Slows to 2.1% and Labour Costs Rise
3 articles · Updated · Westpac IQ · Sep 1
Summary
Australia's economy expanded 0.4% in Q2, beating 0.3% forecasts, but annual growth slowed to 2.1% from 2.5% and six-month annualised growth eased to about 1.5%.
Domestic demand rose just 0.3%—its weakest quarterly gain since late 2023—as household spending stayed modest, business investment fell 0.5% after a Q1 data-centre surge, and public demand cooled.
A 0.6% rise in real household disposable income unexpectedly lifted the savings ratio, while consumers cut overseas travel by $2.7 billion and boosted motor-vehicle imports by a record $3.2 billion.
Flat productivity and slightly higher earnings pushed annual labour-cost growth to 3.6% from 3.2%, a combination likely to deepen RBA concern ahead of its September meeting despite softer demand.
Westpac said interest-rate-sensitive sectors and public spending should remain weak, with AI infrastructure, renewable energy and existing construction pipelines expected to cushion the slowdown.