Australia's gross domestic product (GDP) grew 0.3% in the March quarter on a seasonally adjusted, chain volume basis, after a 0.9% growth in the December 2025 quarter, according to data released on Wednesday by the Australian Bureau of Statistics.
The GDP rose 2.5% compared with a year earlier.
"Economic growth slowed in the March quarter, with modest household and public sector expenditure as well as cyclone disruptions to mining and export activities," said Grace Kim, the bureau's head of national accounts.
Business investment in data center machinery and equipment was the main driver of growth, but since most of these capital goods were imported, the positive effect on GDP was partly offset by a significant drag from net trade.
GDP per capita declined by 0.1% in the March quarter, following a 0.5% increase in the December 2025 quarter.
Household spending rose 0.5% in the March quarter, driven by a nearly 11.7% increase in electricity, gas, and other fuel costs after government rebates ended, which increased out-of-pocket expenses.
"Rising interest rates and significantly higher fuel costs in [March] likely created an environment for more cautious consumer behavior," Kim said.
Government final consumption expenditure fell 0.2%, its weakest quarterly growth since the September 2022 quarter, as Commonwealth defense spending eased and state and local spending dropped after electricity rebates ended.
Exports fell 1.1%, their sharpest quarterly drop in two years, led by coal and ore declines, while imports rose 2.1% on a 6.3% jump in capital goods, subtracting 0.8 percentage points from GDP growth.
Private business investment increased by 6%, largely driven by a 16.3% rise in spending on machinery and equipment (M&E).
"M&E investment recorded the largest rise in 30 years with the expansion of data centers in New South Wales and Victoria during the quarter," Kim added.
The household saving-to-income ratio fell to 6.2% in the March quarter from 7% in the previous quarter, as nominal household spending grew faster than the disposable income.
Household disposable income increased due to a 1.2% rise in employee compensation, but gains were partly offset by higher income tax and interest payments.