Australia’s capital expenditure (capex) slump may have come to an end but stabilisation is probably all Australia can hope for in the near-term. Mining investment has continued to struggle and manufacturing investment is now a small portion and uninfluential portion of the overall total. Increased investment in the services sector is currently offsetting falling levels of investment elsewhere.
According to the latest ABS figures, seasonally-adjusted private sector capex in the December quarter increased by 2.0%, an improvement on the September quarter’s flat result after revisions but more than the 1.0% increase which was expected. On a year-on-year basis, the growth rate rebounded to +1.9% after recording a revised figure of +0.1% in the September quarter.
ANZ senior economist Felicity Emmett said the capex figures compared favourably with the construction figures from the previous day. “In complete contrast to the construction work done data, there was a solid rise in capex in Q4, driven by both construction and equipment. More important was the upgrade to business investment plans, with a non-mining firms planning a further solid expansion of investment in 2019-20, and mining firms now also more upbeat.”