Australia’s economy expected to show mild slow-down at quarterly health check

Australia’s economy is expected to show a mild slow-down when it comes in for its quarterly health check on Wednesday.

National accounts figures are predicted to show gross domestic product grew 0.4 per cent in the first three months of 2025 after expanding 0.6 per cent the previous quarter.

Public investment is expected to have declined as large-scale infrastructure projects wind down, leaving the burden of pushing along the nation’s economy to the private sector.

That could result in a “shaky handover”, says Westpac senior economist Pat Bustamante.

“Is the private sector ready to pick up the slack?” he asked.

“While there are some green shoots, private demand remains patchy at best and at this stage, unable to pick up the slack left by the public sector.”

Household consumption recovered slower than expected at the start of the year, with a return to real wages growth and a boost from Stage 3 tax cuts unable to overturn years of inflation outpacing incomes.

Cyclones and flooding in southeast Queensland and northern NSW would have weighed on public demand but that would be partially offset by a rise in external demand as businesses brought forward orders ahead of “liberation day” on April 2, Mr Bustamante said.

The full extent of Donald Trump’s tariff regime won’t become clear until later in the year, given this set of figures will only show results until the end of March.

Given lower than expected business investment and household spending figures and with the uncertainty of a global trade war clouding the horizon, Australia’s economic growth outlook for 2025 is looking decidedly less rosy.

Also this week, industrial umpire the Fair Work Commission will decide how much wages should rise for about 2.9 million employees on industry awards and the minimum wage.

The peak union body has called for a rise well in excess of inflation of 4.5 per cent, while business groups want a more modest 2-2.5 per cent as anything more would heat up inflation and cause businesses to shutter.

The federal government has split the difference, calling for a “sustainable’ increase to real wages higher than the rate of price increases but that doesn’t further contribute to inflation.

Also on Tuesday, the Reserve Bank releases the minutes from its latest board meeting, at which it lowered interest rates by 25 basis points to 3.85 per cent.

Markets were sent into a spin when governor Michele Bullock revealed post-meeting that the board had considered lowering rates by 50 points.

Traders will study the minutes to see just how close they came to a double-sized cut.

The central bank’s chief economist Sarah Hunter will also be watched closely as she addresses the Economic Society of Australia in Brisbane later that day.

Property analytics firm Cotality, formerly CoreLogic, will reveal whether property prices continued to set records when it releases its monthly home value index on Monday.

To round out the week, the ABS will on Thursday reveal Australia’s international goods trade balance and its household spending indicator, which will soon take over as its main gauge of household consumption from the narrower-in-scope retail trade publication.

Wall Street investors meanwhile took comfort from Mr Trump slamming China before sounding upbeat on the US trade outlook on Friday, with a benchmark index little changed for the day although tallying its biggest monthly increase since November 2023.

The S&P 500 lost 0.48 points, or 0.01 per cent, at 5,911.69, while the Dow Jones Industrial Average rose 54.34 points, or 0.13 per cent, to 42,270.07 and the Nasdaq Composite fell 62.11 points, or 0.32 per cent, to 19,113.77.

Australian share futures were up eight points, or 0.09 per cent, to 11, 359 on Friday.

The S&P/ASX200 edged up 0.7 points, or 0.01 per cent, to 8,410.5, as the broader All Ordinaries fell 1.6 points, or 0.02 per cent, to 8,636.4.