The tech-related investment surge in Australia drove private sector capital expenditure to a 6.5% rise in the March quarter. This was well above expectations (1%) and the strongest rise in a single quarter since the mining investment boom in the early 2010s. The construction and fit-out of data centres has seen capex in the tech-related sector surge by 190% over the past year. Forward looking investment plans for the 2026/27 financial year were upgraded to $173bn, showing no sign of deterioration despite elevated oil prices from the Middle East conflict presenting another shock to the global economy.
Private sector capex rose by 6.5% in the March quarter and 14.6% over the year. This brought capex to its highest level (in real terms) since late 2014, with the current upswing well on track to surpass the peaks seen during the mining investment boom.
Equipment-related spending saw its fastest rise in 30 years, surging by 18.1% to drive all of the quarterly gain in capex. Buildings and structures declined by 3.8%. Over the past year, equipment spending has increased by 31%, while buildings and structures capex has been broadly stable (0.8%).
The main contributor to the capex upswing has been the information media and telecommunications industry following investment in data centres - specialised facilities that house the IT infrastructure required to power the modern economy. Here, capex climbed a further 96% in the March quarter to be up 190% for the year at just below $9bn, placing it second only to the mining sector in terms of capex spend. Spending on equipment required to fit out data centres (including servers and processors) has risen at a stunning 431% pace over the year, while buildings and structures increased 45%.
The report also included estimates of firms' latest capex plans. According to estimate 6, capex in the current financial year is now expected to come in at $208bn, a 4.5% upgrade from estimate 5 taken 3 months ago. That puts capex on track to rise by nearly 11% compared to the previous financial year. Non-mining sector capex is now expected to be $152bn, and $56bn in the mining sector.
Firms also submitted their 2nd estimate of capex plans in 2026/27. These were taken during April and May and so provide an insight into how firms are adjusting to the fuel price shock stemming from the Middle East conflict. Total capex plans were estimated at $173bn, a rise of 9.9% from estimate 1. While early days, there is no sign there of the latest major shock damaging the capex outlook. That is broadly consistent with the ABS's business survey that reported relatively few firms had either delayed or cancelled capex plans due to the crisis. Going back to estimate 2, non-mining capex plans were lifted by 10.9% to $123bn, while mining sector plans increased 7.6% to $51bn.
