SYDNEY (Reuters) - Australian companies have hiked spending plans for the coming year, with non-mining investment leading the way in a positive omen for the economy, data showed on Thursday.
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.
That lagged forecasts for a 1.0 percent gain, but that was only because the previous quarter was revised sharply higher to show a fall of 0.9 percent from a 2.5 percent drop earlier.
Importantly, spending on equipment, plant and machinery grew 2.2 percent and will prove a boost to economic growth in the third quarter.
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 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.
Business investment turned a corner in 2017 after years of decline caused by the end of a once-in-a-generation mining boom.
As Australia tries to meet the need 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 very 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.
“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