Mining investment pushes capital expenditure higher

CAPITAL expenditure by Australian companies continued to grow in the September quarter, supported by strong investment in mining sector.New private capital expenditure rose 2.9 per cent in real terms, seasonally adjusted, in the September quarter to $16.303 billion from $15.839 billion in the June quarter, the Australian Bureau of Statistics said. The fourth estimate of expenditure for 2005-06 is $63.621 billion, which is 17.9 per cent higher than the comparable estimate for 2004-05 and 11.6 per cent higher than estimate three.Macquarie Bank economist Daniel McCormack said the result was a touch stronger than what the market had expected. "This was a reasonably positive number after the very strong surge we had in the second quarter," he said. "There are many capacity constraints currently in the Australian economy particularly in the mining sector, so no doubt that was a factor behind the increase." Actual spending by the mining sector during the quarter rose more than 10 per cent to $1.9 billion. Manufacturing actual spending rose 15.5 per cent to $1.2 billion. Mr McCormack said the other interesting part of the report was there was significant upgrades to firms expectations of spending for the coming financial year."That suggests that business investment is going to be a big driver of growth over the coming nine to 12 months, which is likely to underpin growth numbers next year," he said.

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