- RBA's Statement on Monetary Policy
Australian capital expenditure dropped in the second quarter, but outlook for planned investment improved slightly. Private capex plunged a seasonally adjusted 4.0% in the three months through June, the Australian Bureau of Statistics reported, coming in weaker than economists' forecast for a 2.5% decrease. However, the figure improved after a revised lower 4.7% slump posted in the first quarter of this year from a 4.4% decline estimated earlier. Yet, it was the third quarter of contraction. Australia's mining sector led the fall in capex, with companies taking a cautious view to new investment decisions due to soft economic conditions. Capex in the mining space plummeted 11.3% over the quarter, while manufacturing was down 3.4%, whereas other selected industries rose 4.4%.
Slowing activity in the mining sector in recent years stems from a steep decline in global commodity prices, including iron ore, one of Australia's key export products. Prices for the steel-making component have plunged from above $130 per tonne in late 2013 to around $50 per tonne recently. Reserve Bank of Australia board members have tried to predict how large the decline in mining investment will be, and therefore the aggregate impact on economic growth, unemployment, as well as household spending.
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