Domestic demand is expected to have grown by 1.5 per cent QoQ and 2.9 per cent YoY in Q3—the sharpest quarterly gain since Q1 2012—as the upswing becomes more synchronised across key sectors of the economy.
Growth will moderate over the next few quarters as the impact of lumpy capital expenditure spends unwinds, but gains will remain solid.
The group’s experts estimate that the underlying growth rate was around 0.6 per cent QoQ in Q3. Productivity is expected to rebound and grow by 0.9 per cent YoY. This could see growth in nominal unit labour costs run at around 2.5 per cent in six-month annualised terms—an encouraging signal for the central bank, Pat Bustamante, senior economist with Westpac Group, wrote.
Firmer consumer spending extended into Q3 2025, only moderating a touch.
Household incomes in Australia have been squeezed by elevated inflation, higher rates and an increasing tax take. Household consumption is recovering as these pressures ease and confidence returns, with the stronger than expected Q2 outcome extending into Q3. The Group estimates per capita household consumption should have grown slightly in Q3.
Business investment is expected to have grown at its fastest quarterly pace in Q3 2025 since Q1 2012.
The Group expects net exports to detract by 0.3 percentage points from GDP growth.
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