Aussie business investment dips in first quarter

SYDNEY: Australian business investment fell unexpectedly in the first quarter as floods and bottlenecks hit building work, though firms sharply lifted plans for spending in the year ahead in a boost to the economic outlook.

Data from the Australian Bureau of Statistics showed private capital spending dipped a real 0.9% in the March quarter, from the previous quarter, missing forecasts of a 1.5% increase.

Spending on buildings fell 1.7%, offsetting a 1.2% rise in investment in plant and machinery which is important as this will directly contribute to economic growth in the quarter.

Promisingly, firms upgraded spending plans for the year to June 2023 to a strong A$130.5bil (Us$92.4bil or Rm407bil), up almost 12% on the previous estimate and above the A$122bil (Rm380bil) analysts had looked for.

The report echoes data showing construction work done fell 0.9% in the first quarter as bad weather and supply shortages dragged on activity, particularly in housing where building costs rose at the fastest pace in 21 years.

All of which suggests some downside risk to gross domestic product due next week where analyst forecasts had ranged from quarterly growth as low as 0.2% to as much as 1.0%.

The main unknown is household spending on services, which could have been hit early in the quarter by a sudden outbreak of the Omicron variant of Covid-19.

Retail sales did rise a solid 1.2% in the quarter to a record high A$93bil (Rm289bil) in real terms with consumers not yet deterred by

Reuters* surging goods prices.

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