Capex Buoyed by Government Investment Incentives - ABS
(31 May 2021 – Australia) The latest Australian Bureau of Statistics (ABS) Business Conditions and Sentiments data confirms government business investment schemes such as the expanded instant investment write-off provision and “HomeBuilder” subsidy introduced to combat a COVID induced recession drove resurgent growth in Q1 2021 capital expenditure (capex) and construction spending.
ABS official private investment data revealed a 6.3 percent rise in total investment to A$31.5 billion in Q1 2021, marginally up year-on-year from A$31.2 billion in Q1 2020 at the outset of the COVID pandemic. Promisingly this figure was significantly higher than the mid-crisis periods of Q2 2021 (A$26.1 billion) and Q3 2021 (A$25.9 billion).
Investment spending on equipment, plant and machinery was up a strong 9.1 percent in quarterly terms and rose 5.6 percent in annual terms, supported by non-mining investment which accelerated by 7.1 percent in quarterly terms and 0.8 percent year-on-year.
The data confirms that corporates are restarting mothballed investment intentions and halted pre-lockdown projects, a positive sign for the long term recovery.
“This was the strongest quarterly result since 2012 and at 6.3 percent the print was also significantly better than market expectations for a more modest two per cent increase” commented Australian Institute of Company Directors (AICD) Chief Economist, Mark Thirlwell.
“World trade volumes rose 2.2 percent over the month in March as trade momentum remained strong, although supply chain pressures and capacity constraints also continue to manifest across the international trading system” Mr Thirlwell added.
“In May, 78 percent of businesses reported either no change or increased revenue, which is unchanged from April. 43 percent of businesses reported that their cash on hand could cover three months or more of business operations. Since the end of March, 20 percent of businesses have stopped accessing support measures” the ABS said in a statement.
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