- Capital Economics
Private capital expenditure in Australia dropped more than expected in the first quarter, a further sign the risks for Australia's March quarter GDP data appear to be building to the downside. According to the Australian Bureau of Statistics, business investment plunged 5.5% to $30.613 billion in the three months through March, as non-mining expenditure again failed to pick up the slack in Australia's resources slowdown. Economists, however, had expected a smaller decrease of 3.5%. Spending on equipment, plant and machinery, a direct contributor to GDP, declined 0.5% to $11.753 billion, beating expectations for a fall of 2%. Elsewhere expenditure on building and structures slumped 7.9% to $18.86 billion, well below forecasts for a decrease of 3.0%.
The March numbers also showed a persistent downbeat outlook, although projections are not as depressed as they were at the end of the final quarter of 2015. The second estimate for 2016-17 capital investment came in at $89.2 billion, compared with $82.6 billion in the first estimate at the end of the December quarter. The second estimate is 14.6% below the same reading last year, but the gap shrank as estimate one showed a 19.5% difference to the prior year.
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