Monthly CPI rose with energy rebates expiry
According to ABS, Australian monthly inflation rose from 2.8% in July to 3.0% in August.
The main drivers of the annual increase were housing (4.5%), food and non-alcoholic drinks (3.0%), and alcohol and tobacco (6.0%).
Electricity prices surged 24.6% over the year to August, mainly due to the expiry of state government rebates.
Trimmed mean inflation, which excludes volatile price changes like electricity, was 2.6% in August, down slightly from 2.7% in July.
Vacancies dropped yet still high
In June 2025, there were 340,500 job vacancies. Although the number of vacancies has decreased over the past two year, it is still twice as high as it was before the pandemic.
Australia has 653,800 unemployed individuals, resulting in approximately 1.9 unemployed people per job vacancy. This remains significantly tighter than the normal the ratio of around 4.0.
The industries with the highest job vacancy rates include mining (4.3%), accommodation (3.3%) and professional, scientific and technical (2.8%).
Business turnover contracted in August
According to ABS data, business turnover declined by 2.2% in August 2025 (seasonally adjusted), with nine out of 13 sectors reporting a fall.
This was the largest turnover decline since April 2023, led by a 14.1% drop in the utilities sector, as wholesale energy prices fell after strong gains the July.
Other significant declines were seen in manufacturing (-5.8%), information media and telecommunications (-3.7%), and mining (-1.9%). Growth in construction, transport and warehousing remained modest.
Non-market sector drove recovery
Economic growth remains heavily supported by the non-market sector. Over the past year, market sector output (excluding mining) rose by 1.8% annually, while non-market industries—such as education, public administration, and health & social services—expanded by 3.5% annually.
Industry output declined across key sectors, with manufacturing down 3.9%, professional services falling 2.3%, and construction slipping by 0.4%.
This reflects an ongoing trend where government-backed industries continue to outpace the private market, highlighting that the expected transition to private sector-led growth has yet to fully occur.
Victorian businesses strain
Victoria’s labour market is taxpayer dependent, with 88.3% of new jobs since the pandemic from government-funded industries.
This is more than double the pre-pandemic rate of 34.7%, and above the national average of 78.7%.
Meanwhile, Victoria’s private sector is struggling to recover, with 3,900 jobs lost in 2024—its first decline since the COVID-19 shutdown.
In contrast, Western Australia—which has the lowest non-market sector job creation rate (56.1%)—is also one of the states attracting businesses.
Accord targets off track
The 2023 National Housing Accord set a goal of 1.2 million new homes over five years from mid-2024.
Meeting the target requires 60,000 completions per quarter, but current output is well below that level.
In Q1 2025, completions were 27.98% below target, and in Q2 they fell short by 32.69%. There has been no lift in completion rates in the first year of the Accord.
Meeting housing targets depends on a commercially viable private sector, but residential builders face rising costs and falling profits.
