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Business investment falls off a cliff
Business investment in Australia is contracting at its fastest rate in more than five years and won't improve any time soon, according to the grim results of the latest capital expenditure survey by the Australia Bureau of Statistics.
The ABS said on Thursday that private sector March-quarter investment in buildings, equipment, plant and machinery dropped 4.4 per cent, seasonally adjusted, from the previous three months, and 5.3 per cent on the year.
Resource-related investment, which underpinned Australia's most recent economic boom, plunged nearly 14 per cent compared with the same time last year. Manufacturing, too, was especially weak, down nearly 9 per cent.
Total non-mining capital expenditure fell 4.8 per cent in the quarter.
The headline fall was much worse than expected, and the largest single quarter-on-quarter drop since September 2009.
More importantly, companies' outlook for the financial year about to start remains weak, meaning the much-needed transition towards non-mining related growth is taking longer than expected.
The rapid fall-off in resource investment since its peak in 2012 has recently accelerated because of sharply declining commodity prices.
This was starkly illustrated in a separate report on Thursday by Standard & Poor's, the credit rating agency, which warned that mortgage arrears are starting to climb in mining areas.
After signalling a revised $103 billion in investment in their first estimate of 2015-16 projects, ABS survey respondents remained pessimistic for the second estimate, which came came in at just $104 billion, or 14 per cent lower than actual investment in the financial year which ends in a month.
Business investment in Australia is contracting at its fastest rate in more than five years and won't improve any time soon, according to the grim results of the latest capital expenditure survey by the Australia Bureau of Statistics.
The ABS said on Thursday that private sector March-quarter investment in buildings, equipment, plant and machinery dropped 4.4 per cent, seasonally adjusted, from the previous three months, and 5.3 per cent on the year.
Resource-related investment, which underpinned Australia's most recent economic boom, plunged nearly 14 per cent compared with the same time last year. Manufacturing, too, was especially weak, down nearly 9 per cent.
Total non-mining capital expenditure fell 4.8 per cent in the quarter.
The headline fall was much worse than expected, and the largest single quarter-on-quarter drop since September 2009.
More importantly, companies' outlook for the financial year about to start remains weak, meaning the much-needed transition towards non-mining related growth is taking longer than expected.
The rapid fall-off in resource investment since its peak in 2012 has recently accelerated because of sharply declining commodity prices.
This was starkly illustrated in a separate report on Thursday by Standard & Poor's, the credit rating agency, which warned that mortgage arrears are starting to climb in mining areas.
After signalling a revised $103 billion in investment in their first estimate of 2015-16 projects, ABS survey respondents remained pessimistic for the second estimate, which came came in at just $104 billion, or 14 per cent lower than actual investment in the financial year which ends in a month.
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