NAB Sees Australian Economy Slowing, But Household Spending Still Holding Up

National Australia Bank (NAB) has released its latest report on the Australian economy, predicting that growth will slow to about 1.3% this year and remain soft due to past rate hikes putting pressure on borrowers.

The bank expects weaker momentum to gradually show up in the labor market, with unemployment rising to 4.8% by the end of 2027.

However, NAB's Spend Trend data shows that July spending was up 1.1% from June and 7.7% from a year earlier, indicating that households are still opening their wallets.

The bank attributes this to inflation and interest rates, expecting the Reserve Bank of Australia (RBA) to keep its cash rate at 4.35% into 2027, with the next move likely a cut from the second quarter.