Firms gear for mining hand-off

AUSTRALIAN businesses are ratcheting up their spending on buildings, equipment and machinery, raising hopes the long-awaited “baton change” from the mining sector to the broader economy is in progress.

Capital investment levels blossomed in the three months to June as companies splashed out, official figures show.

The Australian Bureau of Statistics says businesses spent $28.28 billion on buildings, equipment and machinery in the three months to June, up 0.8 per cent on the previous quarter.

It is a pittance compared with the sums being splashed around four years ago when the mining construction boom was at its peak, but will fuel suggestions the shadow of that spending spree is fading.

The figures overwhelmed analysts’ expectations of a 0.2 per cent quarterly lift and were aided by a $12.5 billion investment from corporate chiefs in equipment and machinery.

That tally is 3 per cent down on the same quarter a year ago, but a significant improvement on the 9.3 per cent slide yearon-year in the March quarter.

The ABS estimates the total outlay on capital spending across Australia hit $114.9 billion in the financial year just completed.

While that was down 10.5 per cent, the pace of improvement at the back end of the year points to a rebound this financial year, ending a slide that started four years ago.

Spending in the category known as “other industries” — which includes retail, transport, utilities and construction — hit $66.7 billion in the year to June, an all-time high in the 30-year survey.

Economists said the figures suggested business investment would contribute to economic growth next year, having been a drag on gross domestic product for the past few years.

National accounts for the June quarter are due next week.