Sydney. Australian business investment took a surprising fall last quarter as miners wrapped up work on some major projects, though a sizable upgrade to spending plans for the year ahead suggested the pullback was just a speed bump.
Investment slipped a seasonally adjusted 2.5 percent in the June quarter to an inflation-adjusted A$29.1 billion ($21.2 billion), data from the Australian Bureau of Statistics showed on Thursday (30/08).
That missed forecasts of a 0.6 percent gain, but investment in the previous quarter was revised sharply higher to show an increase of 1.2 percent.
Spending on equipment, plant and machinery fell 0.9 percent and pointed to a very small drag on economic growth in the second quarter. The data nudged the Australian dollar a fraction lower to $0.7293.
Figures due next week are likely to show Australia's A$1.8 trillion gross domestic product expanded by anywhere from 0.6 percent to 1.0 percent in the quarter.
The outlook for the period ahead was positive, as firms across all industries revised up their spending plans for the financial year to June 2019.
The latest estimate for 2018/19 came in at A$102 billion, above analysts' expectations of around A$100 billion and 16 percent higher than the previous forecast.
"This suggests that despite the political uncertainty – domestic and international – seen over the last three months, non-mining business remains broadly confident that conditions are improving enough to warrant expanding capacity," said Sarah Hunter, an economist at BIS Oxford Economics.
"This in turn will be a key driver of growth in employment and the economy over the next year."
Business associations were dismayed last week when the ruling Liberal Party ousted Prime Minister Malcolm Turnbull and replaced him with former treasurer Scott Morrison.
Public Spending a Positive
The Reserve Bank of Australia has long been optimistic on investment thanks in large part to booming public spending on infrastructure, where the pipeline of work is at its highest level as a share of GDP in several decades.
Commercial property has also been undergoing a renaissance, with tourism and student accommodation particularly strong, thanks to a big influx of Chinese visitors.
The ABS report included experimental estimates for private investment in education and health care which showed spending jumped 28 percent in the second quarter to A$2.9 billion.
Home building has been another source of resilience, with data out last week showing a surprising jump in construction work in the June quarter on top of a very upbeat first quarter.
Figures out on Thursday showed approvals to build new homes skidded 5.2 percent in July, but that followed an upwardly revised 6.8 percent jump in June and the trend remains robust by historical standards.