National Economy

National economy

Trends: National economic growth remains modest, recording a 1.3% annual growth rate for the year to March 2025—still well below long-term averages. On a per capita basis, this equates to a decline of 0.4%, reflecting continued pressure from population growth outpacing GDP expansion.

Latest: In the March quarter of 2025, Australia’s GDP grew by 0.2%, but with household saving ratios increasing from 3.9% in the December quarter to 5.2% in the March quarter. In nominal terms (current price), the economy grew by 1.3% in the March quarter, reflecting continued elevated price increases.

Data source: Data source: ABS Australian National Accounts: National Income, Expenditure and Product.

At the national level, Australian Bureau of Statistics (ABS) data shows a quarterly rise in Gross Domestic Product (GDP) of 0.2% for the first quarter of 2025, slightly down on the previous quarter’s rise of 0.6% and giving a 12 month rise of 1.3% (chain volume measures). GDP per capita fell by 0.4% driven by immigration over the previous 12 months. The ABS Australian National Accounts: National Income, Expenditure and Product, June release highlight the following points:

  • Household Consumption: Household consumption continued to grow, mainly due to increased expenditure on energy. Household saving to income ratio rose to 5.2%, a significant increase over the last 12 months.
  • Government Expenditure: Government consumption was overall flat, with increased expenditure on defence offsetting declines in state and local government expenditure, as well as declines in spending on social benefit programs (Medicare and NDIS).
  • Public investment fell after rises in the latter half of 2024. This was offset by increases in private investment, mostly in housing and non-dwelling construction.
  • Net Trade: Net trade detracted 0.1 percentage points from GDP growth, with a fall in exports (-0.8%) being partly offset by a similar fall in imports (-0.4%). A decrease of approximately 3.0% in service exports contributed most to the decline.
  • Mining profits were hit by price falls across coal and LNG due to global over supply. Non-mining industries, particularly manufacturing, services, and financial corporations led increases in profits across the nation.

See ABS for more info.

Data source: Data source: ABS Australian National Accounts: National Income, Expenditure and Product.

Business performance

The NAB Group Economics report that business conditions have continued to ease in 2025, falling to 0 index points in May, down from +6 in September 2024, reflecting ongoing softness in demand and profitability pressures. The latest NAB Monthly Business Survey highlights weak profitability and a further decline in employment conditions - now at a new cyclical low - raising concerns about softening labour demand. While business confidence improved again in May, it remains below long-run averages and is weakest in the retail and wholesale industries.

In New South Wales, business conditions declined to +2 index points (seasonally adjusted), a noticeable softening from earlier in the year. This suggests mounting pressure on sectors like retail and manufacturing, both of which experienced significant drops in conditions nationally. Confidence in NSW remained flat at 0 index points, with the trend below the long-term average.

Sector Insights: Retail conditions and confidence continued to decline across 2025, reversing a late-2024 recovery. Manufacturing saw a sharp decline (–25 index points nationally), whilst mining showed a strong bounce in May (+14), though this is volatile and comes after a large dip in April.

Data source: NAB Group Economics

Household spending

The ABS Monthly Household Spending Indicator for the April 2025 reference period indicates an increase in household spending of +3.7% compared to April 2024 in current prices. In NSW, total household spending increased by +2.6%, led by spending on services (+5.7%), whilst spending on goods was flat (+0%). Spending on food in NSW increased +7%, whilst expenditure on alcohol and tobacco decreased 12%. Discretionary expenditure (+2.1% overall) was driven by spending on recreation and culture (+7.7%) and hospitality (+8.5%)

The consumer price index rose 2.4% in the 12 months to April 2025 following previous trends in 2023 and 2024. The annualised CPI is down from a peak of over 8% in December 2022, now closer to long-term averages. Similar to the last dashboard update, housing (+2.2%), food and non-alcoholic beverages (+3.1%) were the main drivers. Prices for recreation and culture also rose +3.6%. Dairy was the only grocery product that saw price declines, with fruit and vegetables showing the highest increase. Automotive fuel prices fell 13% in the 12 months to April, whilst rents are still rising (0.3% for the month of April, 5.0% for the 12 months to April).

Data source: ABS Monthly consumer price index indicator

The ABS publishes specific price data on housing related expenses to give better insights (at the national level) into the price movements of purchases, rents and other expenses. Rents are still rising (up 5.0% in the previous 12 months). In comparison new dwelling prices have risen 1.2%. Electricity prices have fallen 6.5%, but have been highly affected by the availability of state and federal rebates.

Data source: ABS Monthly consumer price index indicator

An ongoing challenge for housing is the need for a reduction in costs related to construction in order to ensure an adequate supply of building for a growing population. Construction price indices show that prices have further stabilised since the start of 2023, with input prices for construction in Sydney declining by 0.1% in the March quarter, mainly due to reductions in timber prices. Prices of construction output still rose, however, mainly due to increased labour costs.

Data source: ABS Producer Price Indexes, Australia