27 May Q1 Australian business investment sees biggest growth in a decade
The Australian economy has received a boost in the form of better-than-expected capital expenditure figures for the first quarter, as businesses took advantage of tax breaks to buy new machinery.
The Australian Bureau of Statistics revealed today that total business spending rose a real 6.3% in the March quarter (compared to the previous quarter) to A$31.5 billion.
This increased total capex represents the largest quarterly jump in almost a decade (2011) and is significantly more than the forecasted 2% increase, which could compel analysts to mark up the next GDP forecast, out on June 2.
In particular, spending on plant and machinery surged 9.1%, while investment in buildings increased by 3.8%. Firms also revised up spending plans for the year to June 2022 to $113.6 billion, from $105.3 billion in the February report.
“The estimate is consistent with a massive 15% rise in private capital expenditure in the next financial year,” said Ben Udy, Australia & New Zealand economist at Capital Economics.
“The upshot is that firms expect investment to surge in the months ahead.”
However, the data was released on the same day that the state of Victoria announced a lockdown to fight an outbreak of COVID-19, which could impact growth in the current quarter.