Key Australian industry indicators - March 2025

Market sectors remained weak

Industry output saw a modest increase in the December quarter, with a 1.3% annual growth in value-add, largely due to strong performance in non-market sectors.

Non-market sector output grew by 3.2% annually this quarter, while the broader market sector saw a weaker 0.6% annual growth, down 0.2% from the previous quarter.

Manufacturing and professional services are in a technical recession, while construction, wholesale, and retail trade face weak conditions, indicating ongoing challenges for many industrial sectors in Australia.

Moderate wage hike relieved pressures

In the December quarter, wage growth from awards and enterprise agreements slowed, nearing the rate of market-set wages.

Australia's annual wage growth decreased from 3.5% to 3.2%, mainly due to the Fair Work Commission's 3.75% minimum wage hike in 2024.

After two record hikes of 5.2% and 5.75%, regulated wages aligned more closely with market levels, easing wage pressures.

This indicates that the FWC's minimum wage decision in June 2025 will significantly influence future wage trends.

Absenteeism peaks in winter

Employee absenteeism significantly challenges Australian employers, affecting productivity and employee well-being.

From 2015 to 2024 (excluding 2020–2022), absenteeism shows a seasonal pattern: over 8% on average in winter and around 7% or lower in summer. Personal illness, injury, and sick leave are the top reasons for absenteeism, while bad weather and plant breakdowns are the least common causes.

Understanding absenteeism trends helps businesses plan effectively and develop workforce strategies that account for seasonal variations.

Discretionary spending improved

The recovery in household spending continued in the December quarter 2024.
Both non-discretionary (1.9%) and discretionary (1.1%) spending grew in real terms during the quarter.

The growth result for discretionary spending is notable, as it comes after several quarters of stagnant or declining spending.

This recovery is likely driven by the decrease in consumer inflation, which is now below wage growth, leading to higher real wages and boosting consumer confidence.

Government household subsidies and income tax cuts from the 2024-25 budget also came into effect this quarter, further increasing disposable incomes.

Business investment slows

ABS data shows private new capital expenditure (capex) slowed to 3.0% in the December quarter 2024. This year-on-year capex rate was the lowest since the March quarter of 2021, with the exception of June 2024, which had the same rate.

Non-mining capital expenditure fell by 2.1% from the previous quarter, suggesting that investors are hesitating due to the current economic downturn.

Manufacturing (-10.1%) and accommodation and food (-8.4%) reported the lowest capex growth rate among the industries.

Gender pay gap narrows

The gender gap for wages based on average hourly rates of pay was 12.1% in November 2024. This was slightly down from 13.7% in May 2024.

Among 17 industries, public administration has the lowest gender gap at 5.1%. Health care & social assistance has the largest gap with 27.5%, followed by professional, scientific & technical services (25.3%).

Since the pandemic, the most significant reductions in the gender pay gap have been in two traditionally male-dominated sectors: construction (decreased by 10.9% since 2019) and transport (decreased by 5.8%).