Australia’s recovery from a mining investment slowdown is on track as other sectors of the economy step in to fill the breach.
Business investment rose 0.2 per cent in the September quarter, official figures show, beating economists’ expectations of a 1.9 per cent fall.
The rise suggests non-mining activity is strengthening, preparing to pick up where mining investment left off, ANZ senior economist Felicity Emmett said.
“It suggests that firms are planning to increase investment by just over five per cent in the current financial year,” Ms Emmett said.
“I think it suggests the recovery in non-mining activity is really on track and we can continue to expect business investment in non-mining to pick up.”
A solid rise in plant and equipment investment is likely to lift expectations for economic growth in the September quarter, she said.
National Australia Bank senior economist Spiros Papadopoulos said the expectations for future investment show strength in non-mining sectors of the economy are starting offset the fall in mining investment.
“The other industries are coming through, that’s the third solid quarterly gain in a row,” he said.
“It’s a small positive sign that give us hope that we’ll start to see some better non-mining business investment coming though over next couple of years.”
NAB is forecasting economic growth of 0.7 per cent in the September quarter.
“We were forecasting a fall in business investment so there might be some upside risk to that, but it was a small 0.2 per cent gain in business investment, so we’re unlikely to revise our forecasts based on that,” Mr Papadopoulos said.
Economic growth figures will be published next week.
The closely watched investment figures cover investment in capital goods which includes buildings and equipment.
During the 2014/15 financial year, businesses expect to invest $153.21 billion.