Australia’s capital expenditure (capex) slump was thought to be coming to an end as investment in the mining sector reverted back to its long-term mean after a spike early in the decade. Total investment had begun to grow again, driven by investment in the services sector. However, contractions in recent quarters have become the norm.
According to the latest ABS figures, seasonally-adjusted private sector capex in the June quarter contracted by 0.5%, a small improvement on the March quarter’s -1.3% after revisions but less than the 0.4% increase which had been expected. On a year-on-year basis, total capex contracted by 1.0% after recording a revised rate of -1.7% in the March quarter.
ANZ senior economist Catherine Birch said, “Private new capex contracted for a second consecutive quarter in Q2, as a rise in machinery and equipment was more than offset by a drop in buildings and structures. It wasn’t all bad news, though, with mining recording its strongest quarterly result in five years.”