- Michael Turner, RBC Capital Markets
Australian business investment plunged more than anticipated in the final quarter of 2016, official data revealed on Wednesday. According to the Australian Bureau of Statistics, private capital expenditure dropped 2.1% to settle at $27.4B in Q4 on a seasonally adjusted basis, whilst analysts predicted the data to post a moderate decline of 0.5% in the reported period. The reading followed an upwardly revised 3.3% contraction observed through July-September quarter and marked the fourth straight quarterly slide in business investment in Australian firms. CAPEX at services sector enjoyed a 1.8% rally over the final quarter of the previous year, being outperformed by a 3.2% increase in capital expenditure in manufacturing companies. Nevertheless, the positive impact of the latter two sectors was completely wiped out by a dramatic 9.3% plunge in mining CAPEX, which is now standing at the lowest mark in nearly eight years. Furthermore, building CAPEX also fell in the reported quarter, declining 4.1% to $15.3B, compared to a 3.6% slump observed in the Q3. Overall, the ABS report suggested that the short-term outlook for the economy remains soft.
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