Australian private sector capital expenditure rose broadly in line with expectations lifting by 1.1% in the September quarter. Capex was coming off a 2.2% decline in Q2 - its only quarter-on-quarter decline in the past 4 years as business investment accelerated coming out of the pandemic. Firms' forward-looking investment plans were upgraded in line with historical ranges to be pressing $180bn for the 2024/25 fiscal year - its highest level since the mining investment boom.
Gains of 1.1% across buildings and structures and equipment, plant and machinery investment drove capex to rise by 1.1% in Q3 (1.0%Y/Y). Business investment has slowed over recent quarters but remains in an upswing phase post the pandemic, with firms responding to capacity pressures brought on by strong demand, and to upgrade to new technology - including data centres and renewable energy.
Non-mining capex lifted by 2.3% in the latest quarter, up 3.6% through the year. A 3.5% rise was seen in buildings and structures - the ABS's liaison highlighting that investment in manufacturing capabilities and data centres were the key factors - while equipment, plant and machinery spending advanced by 1.4%. Equipment investment stands almost 23% above pre-Covid levels, with spending on new vehicles and software upgrades contributing to the upswing.
In the mining sector, capex declined by 1.9% to be down 5.2% on a year ago. Capex in the mining sector has remained broadly stable over recent years following the winding down of the investment boom - a dynamic surging commodity prices post Covid were unable to change as the focus among mining firms was to sustain rather than expand production.
Today's report included firms' 4th estimates of investment plans for the current 2024/25 fiscal year. Capex plans came in at a figure of $178.2bn, a level last seen near the peaks of the mining investment boom. This forecast represents an upgrade of 5.1% on estimate 3 put forward 3 months ago, tracking towards a 7.5% increase on a year-to-year basis (i.e. compared to estimate 4 for 2023/24). The magnitudes of these upgrades are broadly consistent with what the capex survey has historically reported since its inception in the late 1980s. Excluding today's figures, the average upgrade from estimates 3 to 4 has been 5.5%, and 5.3% on estimate 4 from the previous year.
Going into a more detailed breakdown, investment plans in the non-mining sector were upgraded by 6.7% on estimate 3 to $124.5bn. This included a 10.1% rise in planned spending on equipment ($59.3bn) and a 3.8% lift in the buildings and structures component ($65.2bn). Mining capex plans saw a modest 1.4% uplift on estimate 3 to a $53.7bn figure, a 9-year high. This was driven by a 3.2% increase for equipment ($14.4bn), with buildings and structures up 0.8% ($39.3bn).
