Australian business investment fell by the most on record last quarter as spending by firms in mining and other industries slumped, sending the currency lower.
Capital expenditure plunged 9.2 percent in the three months through September from the prior quarter, the largest decline in records going back to 1989, according to calculations by Bloomberg based on government data released Thursday.
• Mining investment dropped 10.4% in 3Q vs 2Q
• Other industries investment fell 10%
• Manufacturing investment rose 6.9%
Firms estimated they will spend A$120.4 billion on investment this fiscal year, in line with economists’ estimates, and about 21 percent lower than at the same time 12 months earlier, the report showed. The Australian dollar traded at 72.24 U.S. cents at midday in Sydney from 72.60 before the release.
“With commodity prices falling again, the clear danger is that at some point
the Reserve Bank of Australia will have to conclude that the outlook for
investment is worse than it thought,” said Paul Dales, chief economist for
Australia and New Zealand at Capital Economics who predicts a further two rate
cuts to 1.5 percent early next year.