The lift was largely driven by household consumption, supported by rising real incomes and improving sentiment.
The proximity of ANZAC Day and Easter, along with better weather conditions, helped boost activity. But CBA Economists say the real driver was the increase in household disposable income, which rose thanks to lower income taxes, falling inflation and the continuation of the RBA’s rate cutting cycle.
“There has now been a solid increase in real household disposable incomes over the past year,” Belinda Allen, Head of Australian Economics said.
“This should help support household consumption growth over the rest of the year, and we expect to see a pickup in GDP through the remainder of 2025 and into 2026.”
Labour productivity also showed signs of improvement, rising 0.3 per cent in the quarter and turning positive over the year at 0.2 per cent. However, productivity challenges remain in the non-market sector, particularly in education and health care.
Despite the rebound, public investment was a notable drag. The Australian Bureau of Statistics (ABS) reported a fall in state government spending on transport and health infrastructure, as well as lower defence investment.
The public sector made no contribution to growth in the June quarter, after falling last quarter.
CBA continues to expect another rate cut from the RBA in November, with further easing in 2026 possible if labour market conditions deteriorate or the transition to private sector-led growth falters.
See the full report here.