BUSINESSES are unable or unwilling to step up their investments to make up for dwindling spending in the mining sector.
Business investment in capital goods, which includes buildings and equipment, fell 5.2 per cent in the March quarter — much worse than forecasts of a 3.5 per cent fall.
Businesses expect to invest $126.8 billion by the end of the 2015/16 financial year, 15 per cent less than their estimate in the previous year, the Australian Bureau of Statistics said.
As expected, mining investment led the drop in spending, falling 12 per cent in the March quarter.
RBC analyst Michael Turner said non-mining investment was also nearly flat over the quarter.
That is not surprising but it is disappointing, especially as mining investment is likely to fall a lot further.