* Capex rises 6.3% in Q1, beating forecast 2.0% increase<\/p>\n
* Spending on equipment surged 9.1%, on building 3.8%<\/p>\n
* Positive for long-term growth, productivity (Adds detail, reaction)<\/p>\n
SYDNEY, May 27 (Reuters) – Australian business investment jumped by the most in almost a decade in the first quarter as businesses took advantage of tax breaks to buy new machinery, a major plus for economic growth and productivity.<\/p>\n
Thursday\u2019s figures from the Australian Bureau of Statistics showed capital expenditure rose a real 6.3% in the March quarter, from the previous quarter, to A$31.5 billion ($24.36 billion).<\/p>\n
That was far above market forecasts of a 2.0% increase and the largest since 2011, suggesting analysts might nudge up forecasts for gross domestic product (GDP). The GDP report is due out on June 2.<\/p>\n
Spending on plant and machinery surged 9.1%, while investment in buildings rose 3.8%.<\/p>\n
Firms also revised up spending plans for the year to June 2022 to A$113.6 billion, from A$105.3 billion in the February report. That was a bit less than some analysts had hoped for, but still a large upgrade.<\/p>\n
\u201cThe estimate is consistent with a massive 15% rise in private capital expenditure in the next financial year,\u201d said Ben Udy, Australia & New Zealand economist at Capital Economics.<\/p>\n
\u201cThe upshot is that firms expect investment to surge in the months ahead.\u201d<\/p>\n
The news came as the state of Victoria announced a lockdown to fight an outbreak of coronavirus, which could hinder growth in the current quarter.<\/p>\n
But Thursday\u2019s data will likely cheer the Reserve Bank of Australia, which has long bemoaned the weakness of business investment and has counted on a revival to lift the economy this year.<\/p>\n
\u201cThe non-mining sector out-performed the mining sector, which will be a welcome development for policymakers \u2013 new capital will embody the latest technologies, which in turn will improve the productivity of the labour force,\u201d said Sarah Hunter, chief Australia economist for BIS Oxford Economics.<\/p>\n