Australian Q4 business investment jumps, spending outlook robust
(Adds economist comment in para 9-10)
By Swati Pandey
SYDNEY, Feb 28 (Reuters) - Australian business investment
surged past expectations with the biggest jump in three years
last quarter, and companies boosted spending plans for the
coming year in a positive sign for the country's economy.
During the December quarter, investment rose 2.0 percent to
A$30.09 billion ($21.52 billion), the figures from the
Australian Bureau of Statistics showed on Thursday, far
outpacing expectations for a 0.5 percent increase.
The previous quarter was also revised higher to show no
change to investment from a fall of 0.5 percent reported
Importantly, spending on equipment, plant and machinery grew
0.7 percent and will prove a modest boost to economic growth in
the final quarter of 2018.
Figures due next week are likely to show Australia's A$1.8
trillion gross domestic product (GDP) expanded anywhere between
0.2 and 0.6 percent in the quarter.
Analysts were closely watching the spending outlook, which
showed firms were more optimistic about the coming year.
The first estimate for 2019/20 came in at A$92.1 billion, 11
percent higher than the first estimate for 2018/19 with mining
the biggest contributor to the increase, implying the sector
will no longer be a drag on economic growth.
The latest estimate for 2018/19 came in at A$118.4 billion,
about 4 percent higher than the previous estimate and at the
top-end of analysts' expectations of around A$115-A$119 billion.
"The RBA is likely to be relieved with the upgrade to
investment plans," ANZ economists said in a note.
"It is particularly important given the barrage of negative
news over recent months, and suggests that despite the increase
in downside risks for the economy, businesses remain relatively
upbeat about the future."
Business investment turned a corner in 2017 after years of
decline caused by the end of a once-in-a-generation mining boom.
As Australia tries to meet the needs of its ballooning
population, public investment is in a strong upswing, with
flow-through effects on the non-mining sector.
The revival has boosted policymakers' optimism about the
economy, with the Reserve Bank of Australia (RBA) forecasting
above trend growth of around 3 percent this year.
Even so, a sharper-than-expected downturn in the country's
property market and subdued consumer spending are putting the
brakes on economic growth.
($1 = 1.3980 Australian dollars)
(Reporting by Swati Pandey
Editing by Shri Navaratnam)
First Published: 2019-02-28 03:13:09
Updated 2019-02-28 05:20:42
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