How far will business investment fall next year?

The slump in business investment expectations captured by the Australian Bureau of Statistics (ABS) in March’s quarter capital expenditure survey was by far the biggest negative economic news in recent months. This note looks at the relationship between the survey and the actual level of business investment subsequently revealed in the national accounts. And while the note suggests that we should be reasonably confident business investment will be weak next financial year, it is still, at this stage, by no means clear if it will be dire enough to produce a recession. The March 2015 survey’s second estimate of business capital spending for next financial year was a steep 25% lower than the comparable second estimate for registered in March 2014’s quarter survey. This marks the largest percentage decline in a second estimate spending survey report from a previous year, since the survey began in the late 1980’s. Does that mean business investment is set to slump, potentially pushing the economy into recession? To read more visit: (VIEW LINK)