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Data centre investments and a surge in housing activity are fueling robust economic growth
1 hour agoWed 3 Dec 2025 at 12:35am
Australia’s economy expanded by 0.4% in the September quarter, following a 0.7% rise in the June quarter. This places the annual growth rate at 2.1%, up from 2.0% earlier in the year. The quarter’s gains were primarily driven by private investment and higher household consumption, while changes in inventories dampened growth as inventories were drawn down to support exports.
Grace Kim, head of national accounts at the Australian Bureau of Statistics (ABS), noted that GDP per person was flat for the quarter, indicating that overall growth kept pace with population growth.
In its latest forecast, the Reserve Bank of Australia (RBA) projected the economy to grow at about 2% annually by the end of December. The forecast details can be found in the RBA’s November outlook.
Private investment underpinned a solid contribution to GDP growth in the September quarter, adding 0.5 percentage points. This uptick was driven by machinery and equipment spending, which rose by 7.6%, aligning with a rise in imports of capital goods. Kim explained that the increase in machinery and equipment investment reflects ongoing expansion in data centres, which firms are building to bolster growth in artificial intelligence and cloud computing capabilities.
The stronger investment climate also supported housing activity, as higher investor demand helped sustain high real estate turnover and increased dwelling construction. Housing investment contributed 0.2 percentage points to GDP growth for the quarter.
Public investment rose by 3% in the September quarter, reversing a 3.5% drop in the June quarter. Growth was led by public corporations investing in renewable energy, water infrastructure, telecommunications, and rail projects. State and local governments expanded their investment by 1.4% in the quarter, though total spending remained 2.4% below the previous year.
Overall, the scene suggests that private sector capital expenditure—particularly in data-centre capacity—alongside housing activity and targeted public infrastructure, is central to the near-term pickup in Australia’s economic trajectory.
