TMI lowest in May since 2021
The monthly CPI indicator rose by 2.1% in the year to May 2025, down from 2.4% in April, marking its lowest level since October 2024.
Trimmed mean inflation dropped to 2.4% in May 2025 from 2.8% in April, reaching its lowest annual rate since November 2021.
The main contributors of the movement were food and non-alcoholic beverages (2.9%), housing (up 2.0%), and alcohol and tobacco (5.9%). Electricity rebates continued to influence energy costs, with prices falling 5.9% over the year to May - a smaller drop than April’s 6.5%.
Government spending fuels construction
New ABS data highlights the growing influence of government spending on construction demand.
In 2023–24, governments awarded $77 billion in prime construction contracts 26.8% of the total, up from 20.5% in 2011–12. Most of the growth came from infrastructure, where public contracts made up over half of all heavy and civil works.
Public infrastructure spending is now a key driver of construction, especially in civil engineering where governments are the dominant buyer. With the industry under strain, there's a clear need to boost workforce and capacity to meet rising demand.
Skilled tradies in short supply
Job vacancies rose 1% nationally in May, but construction vacancies surged 21% to 22,300 highlighting acute labour shortages in the sector.
While overall vacancies have been trending down since mid-2022, this increase suggests a potential pause in that normalisation. Growth was concentrated in higher-skilled industries, with construction showing the most significant rise.
All major construction trades remain in national shortage, indicating that skilled labour constraints are likely to persist despite broader labour market easing.
Buildings boost still fall short
According to ABS data, residential building rose 1.6% in Q1 2025 to $24.3 billion. However, this remains 5% below the 2018 peak.
Engineering construction has surged since the pandemic, while home building has seen only modest growth despite high demand. An immediate 40% increase in dwelling completion rates is required to meet the goals of the National Housing Accord.
House builders face well-known challenges: shrinking margins; rising costs; labour shortages and falling productivity worsened by excessive regulation across workplaces, planning, and product standards.
Mixed gross operating profits in March
The Australian economy showed mixed year-over-year growth in gross operating profits across industries in the March 2025 quarter.
Finance and insurance led with a 30.2% profit surge, while construction, utilities, and telecoms saw modest 3–4% growth. Accommodation and food services rose just 1.2%, reflecting ongoing hospitality challenges.
Professional services fell 3%, and mining plunged 19.2%, dragging the overall industry average into negative territory at -5%. This suggests that despite some resilience, the broader economic landscape remains uneven, with major sectors like mining facing headwinds that offset gains in other industries.
Shifting patterns in internal migration
Australia’s internal migration has shifted notably over the past 15 years. Queensland and WA have shown the most consistent growth at 0.1%.
WA’s migration patterns have fluctuated, rising 0.02% during the mining boom, but falling during downturns. In contrast, NSW faced the highest net losses, driven by rising housing costs. Victoria and SA showed modest gains but still experienced net outflows.
These trends offer strategic opportunities for businesses, as growing regions require increased housing, infrastructure, consumer goods, and essential services.
