Australia's business investment is the latest key economic measure to deliver disappointing results, growing at just 0.4 per cent over the first three months of the year.

Australia's business investment is the latest key economic measure to deliver disappointing results, growing at just 0.4 per cent over the first three months of the year. Featured

Australia's business investment is the latest key economic measure to deliver disappointing results, growing at just 0.4 per cent over the first three months of the year.
The market had expected capital expenditure would have grown closer to 1 per cent on the back of solid business conditions and confidence. The biggest drag on investment was in the buildings and structures sector, down 1.3 per cent for the quarter, hit by a 16 per cent fall in new factories being built. There was better news in equipment, plant and machinery investment, which feeds directly into next week's GDP figures — it was up 2.5 per cent over the first quarter. Expectations for capex spending next year were also softer than expected. The second estimate for capex in the next financial year comes in at $87.7 billion, representing a step up from the first estimate, but still below forecasts and not much stronger than at the same time last year. Capital Economics' Paul Dales said there were some risks emerging to the generally rosier outlook for business investment, given the weaker than expected result and the only modest upward revision to firms' investment plans. "The news on non-mining investment was particularly disappointing," Mr Dales said. Mining capex, which has been falling for years since the end of resources spending boom, appears to have bottomed out, rising 1.32 per cent over the quarter. "We have been expecting mining capex to stabilise and begin modestly rising as the profile of major project completions is ending, removing a lumpy drag, and revealing a trend of incremental increases in operational capex," JP Morgan's Ben Jarman said. "Manufacturing capex was down [-3.4% quarter-on-quarter] and has had a patchy run — having looked firm last year — momentum has run out for now," he said. "In the many and varied 'other' sectors, capex was up [0.5 per cent] and is growing at a strong 9.6 per cent clip over the year." Capex survey to expandThe Australian Bureau of Statistics announced it planned to fill a glaring hole in the capex survey by including "experimental estimates" for investment in the fast-growing education and healthcare sectors. RBC's Su-Lin Ong said a key flaw in the current survey has been the omission of key service sectors and the RBA has, at times, been somewhat dismissive of this survey for that reason. "From a policy perspective, we suspect the RBA will be a little disappointed with today's survey and its details," Ms Ong said. "While the drag on activity from the completion of large resource-related projects looks almost complete, there is little in the data to suggest any pick-up in this sector. "Stronger capex is almost solely reliant upon the services sector, with the outlook rather lacklustre at this juncture."   By business reporter Stephen Letts ABCBrought you by Cemento Group News

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