ABS head of national accounts Grace Kim said economic growth moderated during the quarter amid softer household and public sector spending, alongside weather-related disruptions affecting mining and exports.
Household spending increased by 0.5 per cent during the quarter, supported by a sharp 11.7 per cent rise in spending on electricity, gas and other fuels after government rebates ended, increasing out-of-pocket household costs. Spending on essential goods and services rose 0.8 per cent, while discretionary spending edged up only 0.1 per cent, ABS said in a press release.
Australia’s GDP grew 0.3 per cent QoQ and 2.5 per cent YoY in Q1 2026, according to ABS data.
Growth slowed due to weaker government spending, cautious household consumption and weather-related export disruptions.
Exports fell 1.1 per cent, while private business investment surged 6 per cent, supported by data centre expansion projects.
Household spending rose 0.5 per cent.
Kim noted that higher interest rates and elevated fuel prices during March likely encouraged more cautious consumer behaviour, weighing on spending across several categories. The data predates the halving of Australia’s fuel excise from April 1.
The government final consumption expenditure declined 0.2 per cent, marking the weakest quarterly outcome since the September quarter of 2022. State and local government expenditure fell 0.8 per cent following the withdrawal of electricity rebate payments.
Severe weather disruptions also affected export-oriented industries. Exports dropped 1.1 per cent, the steepest quarterly decline in two years.
Meanwhile, imports rose 2.1 per cent, driven by a 6.3 per cent increase in capital goods imports. Net trade subtracted 0.8 percentage points from overall GDP growth.
Private business investment climbed 6 per cent, led by a 16.3 per cent surge in machinery and equipment investment, the strongest increase in three decades. ABS attributed the rise to major data centre expansions in New South Wales and Victoria, although much of the equipment was imported.
The household saving-to-income ratio declined to 6.2 per cent from 7 per cent in the previous quarter, reflecting stronger growth in household spending relative to disposable income. Compensation of employees rose 1.2 per cent, but higher income tax and interest payments limited income growth.
Fibre2Fashion News Desk (SG)
