Business investment slumped by a worse-than-expected 2.8 per cent during the December quarter, the latest indication that the Australian economy was struggling even before the coronavirus emerged as a threat.
The seasonally-adjusted $28.45 billion in total new capital expenditure was the lowest quarterly spend in two years and missed consensus expectations of a 0.5 per cent gain.
The December quarter figures follow a disappointing 0.2 per cent capex fall in the September quarter, and will add to the GDP toll already expected from the summer bushfire fallout and coronavirus spread.
Thursday’s Australian Bureau of Statistics data is also likely to fuel expectations of a Reserve Bank rate cut to a new record low 0.5 per cent on Tuesday.
Economic data over the past two weeks has already thrown up sagging December quarter construction figures, as well as continued wage growth stagnation, and an uptick in the unemployment rate.
BIS Oxford Economics chief economist Dr Sarah Hunter said Thursday’s data indicated capex growth will likely miss the RBA’s GDP forecast and heap more pressure on the federal government to open the purse strings.
“We continue to expect further monetary easing, and the pressure will mount on the government to loosen policy,” Dr Hunter said.
Australian companies, however, appear to have bolstered their spending plans going forward.
The latest capex estimate for 2019/20 came in at $120.3 billion, 2.1 per cent higher than the same estimate a year ago.
The first estimate for 2020/21 is also up on last year, 8.8 per cent higher at $100.2 billion.
AAP
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