Australia economy grows less than expected in Q3 as inventories weigh

Australia’s economy grew less than expected in the September quarter, as soft net trade and a sharp rundown in inventories offset solid domestic demand, data from the Australian Bureau of Statistics (ABS) showed on Wednesday.

Gross domestic product grew 0.4% quarter-on-quarter in the three months to Sept 30, data from the Australian Bureau of Statistics showed on Wednesday. The print was below expectations of 0.7% and slowed from the 0.6% rise seen in the prior quarter.

Year-on-year, GDP grew 2.1% in Q3 against expectations of 2.2% and growth of 2.0% in the prior quarter.

Domestic demand remained the primary engine of growth, contributing 1.1 points. Private investment surged 2.9% — the fastest since early 2021 — driven by machinery and equipment spending linked to major data-centre developments.

Public investment rose 3.0% due to increased renewable energy and water infrastructure projects.

Household consumption gained 0.5%, supported by essential spending on electricity, rents, health, and food. The ABS incorporated household solar electricity generation into the national accounts for the first time, reflecting rising rooftop capacity and shifts in power consumption.

Nominal GDP rose 1.7% as domestic prices firmed and the terms of trade edged up 0.3%.

Service industries, including construction and financial services, led gains in production, helping offset declines in mining.