Business investment down, plans upgraded

Business investment fell again in the September quarter as a hangover from the coronavirus crisis, but firms have upgraded their future spending plans for this financial year.

Private capital expenditure dropped three per cent in the September quarter to $25.9 billion, double the decline economists had been expecting.

However, the Australian Bureau of Statistics data released on Thursday showed investment plans have been upgraded to almost $105 billion for the 2020/21 financial year, 6.3 per cent higher than estimated three months ago.

Since the last estimate, the federal budget was released which contained a number of business investment incentives.

In the September quarter, investment in buildings and structures fell 3.7 per cent to $13.8 billion, while spending on equipment, plant and machinery declined 2.2 per cent to $12.1 billion.

The figures feed into next Wednesday’s national accounts for the September quarter.

Economists are expecting a positive growth result, largely as a result of a bounce back in retail spending as COVID-19 restrictions were eased, as well as a recovering employment market.

They will finalise their forecasts after quarterly reports for company profits and inventories, international trade and government spending early next week.

The economy sank into recession for the first time in almost three decades in the first half of 2020, contracting by a massive seven per cent in the June quarter after a more modest 0.3 per cent fall in the March quarter.

Australia has not suffered three consecutive quarters of contraction since the early 1980s recession, when it endured four.

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