August 30, 2018 / 2:09 AM / 10 months ago

Australia business investment slips but firms upgrade outlooks

* Q2 capex down 2.5 pct vs +0.6 pct consensus

* Plant/machinery capex eases, likely drag on GDP

* Spending outlook for the year ahead revised higher

* July building approvals skid 5.2 pct vs 6.8 pct rise in June

SYDNEY, Aug 30 (Reuters) - Australian business investment surprisingly fell in the latest quarter as miners spent less on buildings, data showed on Thursday, but firms upgraded their spending outlooks for the coming year in a positive sign for the economy.

Investment slipped a seasonally adjusted 2.5 percent in the June quarter to an inflation-adjusted A$29.1 billion ($21.2 billion), the data from the Australian Bureau of Statistics showed.

That confounded forecasts of a 0.6 percent gain, while 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 will prove a small drag on economic growth in the second quarter.

The data knocked the Australian dollar about a quarter of a U.S. cent lower to $0.7283.

Figures due next week are likely to show Australia’s A$1.8 trillion gross domestic product (GDP) expanded by anywhere from 0.6 percent to 1.0 percent in the quarter.

The outlook for the period ahead was positive, though, as firms revised up their spending plans for the financial year to June 2019.

The latest estimate for 2018/19 came in at A$102 billion, almost in line with analysts’ expectations of around A$100 billion.

The Reserve Bank of Australia has 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.

Mining investment also looked to have steadied after several years of steep decline and other industries were finally taking up the slack.

Commercial property has also been undergoing a renaissance, with tourism and student accommodation particularly strong, thanks to a big influx of Chinese visitors.

Home building has been another source of strength, 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 rise in June and the trend remains robust by historical standards. ($1 = 1.3729 Australian dollars) (Reporting by Wayne Cole and Swati Pandey)

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