New private capital expenditure has rebounded in the June quarter, rising 1.1 per cent and defying economists' expectations of a decline.
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The seasonally adjusted figure rose 1.1 per cent to $37.646 billion, aided by a 2 per cent rise in buildings and structures to $25.293 billion. The other asset category – equipment, plant and machinery – fell 0.9 per cent to $12.352 billion.
The rise in the Australian Bureau of Statistics index defied economists' expectations. A Bloomberg survey of economists predicted a 0.9 per cent fall, with some predicting falls as severe as 2 per cent.
The gloomy predictions were driven by a 4.2 per cent fall in the index in the March quarter. But on Thursday, the ABS revised that figure upwards by 0.8 per cent due to updated information from survey respondents.
In the industries category of the index, mining – by far the biggest sector – increased by 0.2 per cent, seasonally adjusted, to $20.635 billion. Analysts had expected a sharp drop in the figure due to a fall in mining investment.
Manufacturing, however, shed 6 per cent to $2.086 billion.
The third industry category, other selected industries, increased by 3.4 per cent to $14.925 billion.
ANZ economist Dylan Eades noted that the decline in equipment, plant and machinery spending could hurt second-quarter GDP data.
"Machinery and equipment investment, which is the only part of this survey that feeds directly into GDP, falling 0.9 per cent, which was weaker than we were expecting," he said. "As such, these data provide modest downside risks to our second-quarter GDP forecasts."
Mr Eades said the ABS forecasts for total capital expenditure suggested a fall of 1 per cent in 2014-15 compared with 2013-14. This consisted of a 7 per cent increase in non-mining expenditure and a 15 per cent decline in mining expenditure.
"In our view, today's CAPEX release does not materially change our outlook for monetary policy," Mr Eades said. "We expect the Reserve Bank to leave rates on hold until mid-2015.
"The Reserve Bank will likely be encouraged by the further improvement in non-mining investment intentions as it suggests that growth drivers in the non-mining sectors of the economy are broadening."
Nonetheless, the decline in mining investment will provide a headwind to growth, he said.
