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1. Australia’s GDP rose +0.8% q/q and +2.6% y/y in Q4 2025. This is faster than annual potential growth of ~2% and is consistent with the recent modest fall in the unemployment rate and increase in firms’ reported capacity utilisation over H2 2025.
Quarterly GDP growth was softer than our final nowcast of +1.0% q/q but upward revisions to growth in recent quarters meant that year-ended growth was a bit stronger than our +2.5% y/y nowcast.
The RBA had pencilled in +0.8% q/q and +2.3% y/y in the February SMP.
Quarterly growth in most GDP expenditure components was similar to our expectations.
The BIG surprise was that household consumption grew just +0.3% q/q in Q4, well below our nowcast and the Bank’s February SMP forecast of more than +1% q/q.
As we discuss below, however, we lean towards focusing on consumption excluding tobacco and utilities to get a clearer read of trends in consumer spending.
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