* Q3 business investment slips 0.5 pct vs +1.0 pct consensus
* Plant, machinery spending up 2.2 pct, will likely add to GDP
* Biggest upgrade to investment plans in 19 years - CommSec (Adds analyst comment, detail on renewable generation)
By Swati Pandey and Wayne Cole
SYDNEY, Nov 29 (Reuters) - Australian companies sharply upgraded spending plans for the coming year thanks in part to strong earnings and low interest rates, with non-mining investment leading the way in a positive sign for the economy.
During the September quarter, though, investment eased 0.5 percent to A$29.5 billion ($21.6 billion), the data from the Australian Bureau of Statistics showed on Thursday.
While it lagged forecasts for a 1.0 percent gain, that was only because the previous quarter was revised sharply higher to show a fall of 0.9 percent from an initial estimate of a 2.5 percent drop.
Importantly, spending on equipment, plant and machinery grew 2.2 percent and will prove a boost to economic growth in the third quarter.
Business investment turned a corner in 2017 after years of decline caused by the end of a once-in-a-generation mining boom led by public investment on infrastructure and a surge in renewable energy projects. A record low policy rate of 1.50 percent is also helping.
Figures due next week are likely to show Australia’s A$1.8 trillion gross domestic product (GDP) expanded by anywhere from 0.5 percent to 1.0 percent in the quarter.
Analysts were closely watching the spending outlook, which showed firms were more optimistic about coming year.
“The good news is that businesses nationally are lifting spending plans,” said Craig James, chief economist at CommSec.
The latest estimate for 2018/19 came in at A$114 billion, 11 percent higher than the previous estimate and above most analysts’ expectations of around A$104-A$112 billion.
That is the biggest upgrade in spending plans for 19 years, James added.
“Underpinned by record profitability, Aussie businesses are expected to lift spending significantly over the next nine months.”
As Australia tries to meet the needs of its ballooning population, public investment is in a strong upswing, with flow-through effects on the non-mining sector.
The past year has seen a long-awaited, and welcome, surge in non-mining investment with 16 out of 17 industries increasing spending.
The revival has boosted policymakers’ optimism about the A$1.8 trillion economy, with the Reserve Bank of Australia (RBA) forecasting above trend growth of more than 3 percent over the next couple of years.
Kristina Clifton, an economist at CBA, noted utilities had led the way with investment up no less than 75 percent in the year to June, compared to the previous 12 months, driven by a boom in the renewables sector.
A report by the Australian Institute released on Thursday showed renewable generation in the country surged by more than 20 percent since the start of the year to a record in October.
The gains were largely thanks to eight new solar farms that came online over the last two months. “There is a large pipeline of work still to come which means that investment in renewable energy is likely to remain at a high level over the next few years,” said Clifton. Also strong have been health, tourism and education, with the latter two benefiting from an influx of Chinese visitors and students. ($1 = 1.3691 Australian dollars) (Reporting by Swati Pandey; Editing by Kim Coghill & Shri Navaratnam)