Australian private sector capital expenditure lifted modestly by 0.2% in the June quarter, underwhelming expectations for a 0.9% rise. The outcome reverses the decline seen in the March quarter, leaving capex flat through the first half of the year. Forward-looking capex plans rose 12% in the latest estimate to $175bn for 2025/26 but are subject to considerable uncertainty.
Today's report feeds into economic growth calculations ahead of next week's national accounts and indicates that business investment was subdued in the June quarter. Capex spending in real terms lifted by just 0.2% in Q2, rising by a modest 1.7% through the past year. Within this, buildings and structures rose 0.2% (4.3%Y/Y) and equipment, plant and machinery firmed 0.3% (-1.1%Y/Y).
The capex survey provides a large amount of detail, so extracting the key themes is the focus. The overarching theme at present is that momentum in the capex cycle has stalled, with economic and policy uncertainty and higher interest rates all in the mix. Capex expanded by 1.7% over the back half of last year - almost all of that growth came in the September quarter - but has then gone on to slow to be flat (0%) over the first half of this year.
The slowdown has been driven by the non-mining sector, which after rising by 3% for the back half in 2024 dipped by 0.2% for the first half of 2025 - notwithstanding a 0.9% lift in the latest quarter. Equipment investment by the sector has seen a clear pullback, down 2.3% in 1H 2025 (from 0% in 2H 2024), while buildings and structures investment slowed to growth of 2.2% in the period (from 6.9%).
Over in the mining sector, capex - despite falling 1.4% in Q2 - was up 0.6% for the first half this year, partially rebounding from a 1.5% fall for the second half of 2024. Capex in the sector has remained at fairly stable levels through this cycle even with elevated commodity prices.
Today's report included firms' latest estimates for planned capex spending (in nominal terms). Firms' 3rd estimate of capex spending for 2025/26 came in at $175bn, an upgrade of 12% on estimate 2 that was put forward 3 months ago. This figure implies capex is on track to rise by 3.1% compared with spending in 2024/25. Given the high level of uncertainty around the global economic outlook following the US administration's new tariff regime, forecasts for capex plans probably carry less weight than usual. Investment plans in the non-mining sector lifted to $122.1bn, up 14.6% on estimate 2. Meanwhile, plans in the mining sector rose to $52.7bn, an upgrade of 6.4%.
