March 4, 2026 — 11:57am
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The Australian economy has posted its best performance in almost three years, expanding by 0.8 per cent through the final three months of 2025.
The Australian Bureau of Statistics reported that annual growth lifted to 2.6 per cent, while GDP per capita also increased.
Productivity was flat in the quarter but over the past year rose by a full percentage point. Real unit labour costs edged down by 0.6 per cent in the quarter to be 0.1 per cent lower over the past year.
Spending on sporting events such as the Ashes contributed to the boost. Getty Images
The bureau’s head of national accounts, Grace Kim, said growth came from various parts of the economy.
“There was broad-based economic growth in the quarter, with rises observed in a large majority of industries. Public and private demand each contributed 0.3 percentage points to GDP growth,” she said.
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“GDP per capita increased for the fourth consecutive quarter and is now 0.9 per cent higher than a year ago, the highest through the year growth since December quarter 2022.”
Household spending lifted by 0.3 per cent in the quarter to be 2.4 per cent up over the year. Discretionary spending increased by 0.4 per cent thanks to the Black Friday and Boxing Day sales plus various sporting events such as the Ashes Test series.
The bureau noted that spending on electricity, gas and other fuels fell by 9.5 per cent in the quarter. Actual usage of electricity fell by 3.3 per cent.
Private investment lifted for a fifth consecutive quarter, with business continuing to lift spending in areas such as data centres and on aircraft. Housing investment added 0.1 percentage points to growth due to a lift in the construction of apartments.
Public investment lifted across all levels of government.
State and local government spending increased by one per cent, due in part to electricity rebates and expenditure on health, education and police.
Federal government spending lifted by 0.8 per cent. Much of this was due to a lift in federal investment, largely due to an increase in spending on defence.
At the state level, the fastest growth occurred in South Australia where state final demand lifted by 1.2 per cent in the quarter. That was driven by 2.5 per cent increase in government expenditure.
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State final demand was also strong in the Northern Territory (0.8 per cent), Victoria (0.7 per cent) and NSW (0.6 per cent).
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Shane Wright is a senior economics correspondent for The Age and The Sydney Morning Herald.Connect via X or email.From our partners