Economy stalls
GDP growth slowed to just 0.3 per cent seasonally adjusted in the March 2026 quarter, and 2½ per cent over the year.
There was some Cyclone disruption to coal and ore exports, which didn't help the slightly glum overall picture.
The economy has added 1 million additional people over the past two years, though, and after accounting for population growth GDP per capita was negative, and remains below previous highs.
Indeed, per capita GDP was actually higher 15 quarters earlier, in June 2022.
The household saving ratio is now pulling back again as mortgage repayments rise in 2026.
For now at least, Australia's terms of trade remain way above their long-run averages, though there is obviously some downside risk here.
Domestic demand appeared solid enough in the March quarter (though the jump was partly due to the ending of electricity rebates leading to more spending in this area).
However, the economy is likely to be in something of a rut through this calendar year as households will need to absorb the three recent interest rate hikes already delivered, and perhaps more yet besides.
As
previously noted last week, the one bright spot related to data centres in New South Wales and Victoria, with machinery and equipment investment seeing the biggest surge in 30 years.
The wrap
Overall, this was a sluggish result, which might've even been in outright recession territory were it not for the timely boost in investment in data centres, processors, servers, and IT equipment in Sydney and Melbourne.
Looking ahead the series of interest rate hikes will likely weigh further on consumption and housing construction.
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Asking rents rose 1.2 per cent in the capital cities over the past month, to be 7.6 per cent higher over the year.
Unit asking rents rose 0.4 per cent over the month, to be 6.6 per cent higher over the year, according to SQM Research's figures:
Source: SQM Research
Just anecdotally, we've had a couple of Brisbane clients rent out properties at the first busy open homes at rents up to $100/week above where we'd appraised the market to be...though I reckon this dynamic may apply to well-located family homes, but probably less so for generic units.
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