Australian Companies Averse to Future Investment

Australian businesses plan to cut investment in the next 12 months by the most on record as the economy struggles to find new sources of growth after the end of a decade-long mining investment boom. The currency slumped.

Capital spending fell 4.4 percent in the first quarter from the final three months of last year, data showed Thursday, double the median forecast for a 2.2 percent drop. Companies predicted they would invest A$104 billion ($80 billion) in the year ending June 30, 2016, a 25 percent fall from the estimate a year earlier and the largest decline since at least 1990.

“The capital expenditure outlook deteriorated from already bleak three months ago, to now recessionary,” George Tharenou, an economist at UBS Group AG, said in a research report. “This data is so bad it would worry the Reserve Bank of Australia and now raises the risk they cut rates again,” possibly before second-quarter inflation data is released in July.

Bloomberg

Stuart McPhee
Stuart McPhee
Australian private trader for nearly 20 years, author, trading coach, licensed adviser and regular speaker at major trading events all around the world. Graduate of RMC Duntroon and former Australian Army Officer.