Aussie households now saving 4.2% of their income

According to the ABS Australia's GDP grew 0.6% from April to June in current price terms, up 1.8% from June '24.

GDP per capita increased 0.2% after dropping in the March quarter, meaning Australia for now has avoided slipping back into an official per capita recession (two quarters of negative GDP per capita growth).

However, the household saving ratio dropped back to 4.2% in Q2 after hitting 5.2% during the March quarter.

There was a rebound in spending for both households and governments after what ABS head of national accounts Tom Lay called "subdued growth" earlier in the year.

"Economic growth rebounded...following the March quarter which was heavily impacted by weather events," he explained.

Read more: How much do Australians save?

Economic growth above RBA forecast

At 1.8% GDP growth through the 12 months to June exceeded of the most recent RBA forecasts (1.6%).

It was the spending of everyday Australians that was hotter than anticipated with household consumption over the 12 months assessed increasing 2%, where the RBA was expecting just 0.7%.

The February and May interest rate cuts may have put more money back into people's pockets than forecast, with a 1.4% quarterly increase in discretionary spending.

This was attributed by the ABS to a tourism boost, with spending on recreation and culture (up 2% over the quarter), transport (up 1.7%) and hotels, cafes and restaurants seeing particular boosts.

Weak investment a worry?

After declining slightly from April to June business investment increased just 0.1% from June '24 to '25 - the RBA was predicting 0.6%.

Soft investment is closer to the prediction in the May Statement on Monetary Policy (SOMP) which put business investment through the year to June at 0.2% among a set of forecasts based on a bigger response to international uncertainty about US-led tariffs.

Public demand was also well below RBA forecasts, growing 3% through the year compared to a prediction of 3.9% in the August SOMP.

Soft government investment in Q2 was generally predicted by most economists, with CommBank economists calling it a "downside risk" for long term growth.

"[Government finance] data suggests the transition from the public sector driving growth to the private sector is underway and may not be smooth sailing," CBA economists Belinda Allen, Harry Ottley and Lucinda Jerogin wrote.

"A continued moderation in public investment and consumption without a comparable lift in the private sector could be a downside risk to growth."

With household spending continuing to grow though, for now these downside risks may be mitigated.

It's also worth remembering the second cash rate cut came only halfway through the June quarter, and the most recent August cut came after, so further increases in the disposable income of mortgage holders could be a further boost to household spending.