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Australia Jobs Growth Strengthens Rate Hike Outlook 
Australian household spending showed strong momentum for a second straight month in November, reinforcing signs that the economy is gaining traction and increasing expectations of future interest rate hikes. According to new data from the Australian Bureau of Statistics (ABS), consumers boosted spending on Black Friday sales, major concerts, and sporting events, driving solid growth across both goods and services.
The ABS monthly household spending indicator (MHSI) rose by 1.0% in November to A$79.4 billion, following an upwardly revised 1.4% increase in October. This back-to-back growth points to a robust fourth quarter for consumer spending, an important driver of Australia’s economic activity. On an annual basis, household spending growth accelerated to 6.3%, the fastest pace since September 2023 and up from 5.7% previously.
Economists say the strength of consumption could be a concern for policymakers. Abhijit Surya, senior Asia-Pacific economist at Capital Economics, noted that the resilience in household consumption is likely to trigger “alarm bells” at the Reserve Bank of Australia (RBA). He added that the growing contribution from services spending suggests the consumption upswing has genuine momentum rather than being a one-off event.
Spending on goods increased by 0.9% in November, with clothing, footwear, furnishings, and electronics recording the strongest gains as shoppers capitalized on heavy discounting. Services spending rose even faster, up 1.2%, supported by strong demand for entertainment, concerts, and sporting fixtures.
The spending surge comes as inflation remains above the RBA’s target range. Headline inflation stood at 3.4% in November, while core inflation eased slightly to 3.2%, both still above the central bank’s 2% to 3% target band. The RBA cut interest rates three times last year to 3.6%, but has warned that the next move could be a rate increase if inflationary pressures persist.
Financial markets are increasingly pricing in tighter policy, with swaps implying a 25% chance of a rate hike in February and around a 76% probability of a move in May. Over 2026, investors expect total rate increases of roughly 30 basis points, reflecting confidence that Australia’s economy is regaining strength.
