Australian Business Investment Rises in 2Q

By James Glynn Features Dow Jones Newswires

Australian firms scaled up investment spending by 0.8% in the second quarter from the first quarter, helped by strong commodity prices and upbeat business confidence.

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Economists surveyed ahead of Wednesday's release by the Australian Bureau of Statistics had expected a 0.2% increase. Mining investment fell by 2.8% in the quarter, while investment in new machinery rose by 2.7%.

The data also showed that companies expect to invest 102 billion Australian dollars in the year through June, 2018, down 3.6% than a corresponding estimate for the prior fiscal year.

The rise in investment in the second quarter suggests new capital expenditure will make a contribution to GDP growth. The ABS will publish GDP data on Wednesday.

Australia's economy has been in transition for a number of years, as a fall in mining investment has dragged on the economy.

With that process having almost run its course, the investment outlook is expected to improve led by services industries such as health care, education and tourism.

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The drop in mining investment followed the biggest resources boom in the country's history, which peaked in around 2012. That is now the basis of an export surge driven by vastly expanded production of iron ore and liquefied natural gas.

Still, more investment in non-mining is needed to lift GDP and achieve optimistic forecasts recently set by the Reserve Bank of Australia.

Business confidence and conditions surveys show firms are upbeat on the economic outlook. Economists expect this will support a rise in investment in areas of the economy outside of mining over time.

-Write to James Glynn at james.glynn@wsj.com

(END) Dow Jones Newswires

August 30, 2017 21:49 ET (01:49 GMT)