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The Australian economy expanded by 0.3 per cent through the first three months, driven by consumer spending and businesses rolling out data centres to harness the AI revolution.
The Australian Bureau of Statistics on Wednesday morning reported the lift, which was in line with market expectations and meant annual growth was steady at 2.5 per cent.
Household spending lifted by 0.5 per cent last quarter, driven in part by extra expenditure on electricity and gas due to the end of government subsidies.
Spending on essentials rose by 0.8 per cent, but discretionary expenditure rose by just 0.1 per cent.
“Rising interest rates and significantly higher fuel costs in the March month likely created an environment for more cautious consumer behaviour,” the bureau’s head of national accounts, Grace Kim, said.
The March quarter results predate the cut in fuel excise, which has helped push petrol prices down to around the level they were at before the US and Israel’s war against Iran.
Government spending fell by 0.2 per cent in the quarter, the lowest quarterly result since September 2022.
Private business investment jumped by 6 per cent, driven by a 30-year-high increase in machinery and equipment, which is being pulled into the country for the construction of data centres. New business investment added 0.7 percentage points to the overall result.
Almost all that equipment, however, is from overseas, which meant net trade detracted 0.8 percentage points from growth.
The figures were softer, the ABS noted, in part due to cyclone activity, which meant a fall in mining exports.
Treasurer Jim Chalmers said the growth was solid given the circumstances faced by the nation at the start of the year.
“Annual growth in Australia is faster than almost every major advanced economy and above the OECD average,” he said in a statement.
“The Australian economy is outperforming when it comes to annual growth, has stronger employment growth than almost every major advanced economy, and has lower gross debt-to-GDP than every single major advanced economy.”
At the state level, the impact of the data centre surge was evident.
State final demand, which does not include international trade, surged by 1.8 per cent in NSW due to a 9.5 per cent increase in private capital spending. Victoria reported growth of 0.9 per cent in the quarter with private capital spending up by 3.5 per cent, which offset a 0.6 per cent drop in public capital expenditure.
Growth was also solid in Queensland (up by 0.9 per cent), South Australia and WA (both 0.5 per cent). Tasmania’s state final demand fell by 0.7 per cent, while it dropped in both the NT (0.4 per cent) and the ACT (0.6 per cent), with each jurisdiction suffering falls in private capital spending.
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