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Category: Economic Trends

Business investment keeps falling, but plans beat expectations

Thursday, 1 Sep 2016 10:07:35 | Stephen Letts

The resources construction boom continues to wind down. (Supplied: INPEX)

The ongoing laggard in the Australian economy, business investment, has fallen again, tumbling another 5.4 per cent in the June quarter to be down more than 17 per cent over the year.

The seasonally adjusted data from the Australian Bureau of Statistics was weaker than the market forecast of a 4 per cent decline over the quarter.

Once again mining was the main drag, with new capital expenditure - or capex - down 16 per cent over the quarter.

While the painful unwinding of the mining boom continues, there are signs that the non-mining sector is starting to pick up some of the investment slack.

In seasonally adjusted terms, manufacturing capex jumped 12.9 per cent, while equipment, plant and machinery investment was up 2.8 per cent.

Investment expectations jump

In the key reading of planned capital expenditure in the year ahead, the third estimate increased to $105 billion, up from $89 billion in the second reading three months ago.

The solid increase in expectations exceeded the market forecast of $97 billion.

While the figure is to a degree speculative, it implies a roughly 10 per cent decline in total capital expenditure from last year, driven largely by a 26 per cent in fall in mining investment as well as a small decline in non-mining capex.

It should be noted that the ABS capex data has very patchy coverage of the growing services sector industries, such as health and education, and it also largely excludes the investment contribution from agriculture.

More to come.

AustraliaPlus


 

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