SYDNEY Dec 1 Australian business investment
fell a surprisingly sharp 4 percent last quarter as miners and
manufacturers cut back on spending, a disappointing report
underlining the real risk that the whole economy may have
Thursday's figures from the Australian Bureau of Statistics'
showed business investment fell 4 percent in the third quarter,
when analysts had looked for a drop of only 2.5 percent.
With spending on equipment and building declining,
investment likely took another heavy toll on gross domestic
product (GDP) which was already looking soft after reported
weakness in retail sales.
Such was the drag that the economy may have shrunk in the
quarter, something that has only happened three times in the
past 25 years. The last negative quarter was back in 2011 and
that was caused by massive flooding in Queensland.
The GDP report is due on Dec. 7.
The data was also a blow to the Reserve Bank of Australia's
(RBA) hopes for a revival in investment outside of the hard-hit
Neither was the outlook much brighter with the latest survey
estimate of planned investment for 2016/17 coming in well under
expectations at $106.9 billion. Analysts had looked for
something around A$111 billion.
Investors reacted by nudging the local dollar down slightly
to $0.7380. The currency had already been under
pressure after the U.S. dollar jumped on higher Treasury yields.
Interbank futures <0#YIB:> still suggest the market sees
scant chance of another cut in interest rates for the next few
months, though any thought of a hike has also been priced out.
(Reporting by Wayne Cole; Editing by Eric Meijer)