The National Accounts, published by the ABS on September 2, confirmed that gross domestic product expanded 0.4% in the three months to June 30, accelerating from 0.3% in the March quarter, despite the drag from higher interest rates and ongoing Middle East tensions.
Treasurer Jim Chalmers emphasised Australia’s relative outperformance, saying in a statement that annual growth “was as strong or stronger than every major advanced economy – equal to the United States and much stronger than the rest”. He pointed to signs of recovery in dwelling investment, which grew 1.6% in the quarter and 5.8% through the year, driven by both new building and renovation activity.
But economists warned the data would make it hard for the RBA to avoid further tightening. IFM Investors chief economist Alex Joiner said the National Accounts highlighted an “unsustainable” growth path, noting that productivity remained poor, per capita GDP was flat, and unit labour cost growth was elevated. “The economy risks not slowing quickly enough for the RBA to achieve its inflation objectives and as such it should raise rates in either September or November,” Joiner said.
Market pricing now fully factors in a rate hike by November, with a 20% chance of increases in both September and November, according to Bloomberg analysis of futures. The cash rate currently sits at 4.35%, with traders betting it will peak at 4.8% by mid-2026.
Indeed Asia-Pacific economist Callam Pickering highlighted the productivity stagnation: “Australian workers today are no more productive than they were seven years ago.” He noted that labour productivity, measured as real GDP per hour worked, was unchanged in the June quarter, 0.2% lower than a year earlier, and 5% below its peak. “It turns out artificial intelligence is everywhere, except in the productivity data,” he said.
Marcel Thieliant of Capital Economics said a rate hike was probable but not certain. “With GDP growth and inflation holding up better than the RBA had anticipated, the bank will probably hike rates before long, perhaps as soon as this month,” he said, adding that “a rate hike isn’t a done deal yet – after all, the labour market is now clearly loosening and revised data show that the housing downturn has accelerated.”