Businesses still planning to spend in coming months

Poppy Johnston | June 1, 2023

New private capital spending lifted a convincing 2.4 per cent in the March quarter.

A 3.7 per cent increase in machinery and equipment spending fed into the solid quarterly result.

Australian Bureau of Statistics head of new capital expenditure statistics Ben Dorber said this was the largest quarterly rise since the March quarter of 2021. 

The new ABS figures revealed a sharp fall in equipment capex in the construction industry – down 23.1 per cent – but this was somewhat balanced by robust results in other sectors.

“The fall in construction businesses investing in new equipment and machinery follows a period of high investment in recent years and may demonstrate some of the impact from continued falls in building approvals,” Mr Dorber said.

“Construction businesses expectations for future investment, however, remain positive.”

Business investment in buildings and structures also lifted by a more modest 1.3 per cent across the quarter. 

Oxford Economics Australia head of macroeconomic forecasting Sean Langcake said business investment might prove to be a bright spot in an otherwise gloomy quarter for economic growth. 

The report also offers insights into Australian businesses’ future investment plans, with the $137.6 billion figure for 2023-24 about 6.4 per cent higher than an earlier estimate.

Mr Langcake said firms’ expectations for capex spending remained healthy.

“However, this may be an acceptance of higher cost inflation, rather than an intention to make larger additions to the capital stock,” he said.